Wednesday, January 25 2012 16:17
Individual health insurance market in Armenia “preparing” for multiple growth
ArmInfo. Interview with Levon Altunyan, CEO of INGO Armenia Insurance Company
Mr. Altunyan, the state budget of Armenia for 2012 envisages a social package for civil servants (over 110,000 people) in the amount of 18 bln drams ($47 mln). Civil servants are allowed to spend these funds also on health insurance. This program will boost the medical insurance market in Armenia. However, it is certainly risky for insurers...
The state budget has approved 132,000 drams per civil servant and suggests 4 dimensions to spend that money: health insurance, rest, education, or mortgage repayment. I think the government has a right to decide on behalf of civil servants how they should spend the state funds, for all the 4 dimensions will upgrade the performance efficiency of civil servants.
As for the possible risks for insurers, the minimum basic package of health insurance under the given program has been coordinated with 7 of 8 insurance companies in the market. All the seven companies approved it. It is not a compulsory program and insurers can refuse it. There are no risks for the market, I think. Another matter that threats may emerge if insurers have to pay too big and groundless commissions. Since the cost of the package is strictly determined, it would be unreasonable and even dangerous for the market to involve agents into the process. Therefore, we will offer the given insurance line through our staffers and not agents.
What category of insurees the insurers will deal with? In what age group are the potential insurees? Isn’t it risky for insurers?
Most of the potential insurees (78%) are women at the age of 30-50 with the average monthly income of 60,000-120,000 drams.
Rather a risky group for insurance…
These are mostly intellectuals i.e. librarians, teachers, cultural workers who are undeservedly deprived of material benefits. At present, together with the government, insurance companies try their best to close the gap.
Вы имеете общее представление о страхователях, но не знакомы с историей болезни каждого из них. При этом, участвуя в программе страховая компания ведь не может отказаться от страхования того или иного - рискованного госслужащего…
You have general information on the insurees, but not on their clinical records. In addition, a company involved in the program cannot refuse separate risky civil servants…
An insurance company has a right to refuse the program. In addition, if a company involved in the program has sold, for instance, 500 risky policies, it can close the program and transfer those policies to another insurer. The latter can liquidate that risk through its less risky package.
Nevertheless, insurers deal with a serious percentage of “problematic” insurees – civil servants…
Their share is around 20%.
And maybe even 40%…
Do you mean that insurers must insure less risky insurees and refuse others?
But, it is the only way to make health insurance under the given program relatively profitable for insurers…
You speak of the ideal insuree – when wealthy and healthy people buy policies.
I speak of balancing the risks, which is quite difficult under the given program.
If an insurance company fails, it will collapse. Collapse is possible if a company works not professionally.
Mr. Altunyan, do you expect any serious growth in the health insurance market after implementation of the given program?
I think, the market will jump over 300%. It will boost both the institute of insurance and health insurance services in Armenia. The quality of medical services will become priority for insurers: adequacy of the medical benefit, reasonability of expenses on treatment and diagnostics. It is not a secret that administration of medical establishments is interested in carrying out a big number of expensive procedures, while insurers have more rational approach i.e. optimization of diagnostic procedures. It requires up-to-date equipment and highly qualified specialists.
The program will have a positive impact on the market of medical services and within 2-3 years the long awaited compulsory medical insurance will be launched in Armenia.
In the market of medical insurance there are problems certainly limiting the opportunities of insurers to promote this product among potential customers. What do you think of these problems?
Four out of the eight insurance companies in the country offer health insurance policies. A fifth company is expected to enter the market shortly. Our key problem is the low tariffs of medical insurance. In addition, the public is not aware that they acquire a health insurance policy for trifling sum. Many policyholders are not aware of the essence of insurance. Some insurees buy policies for 45,000 drams and expect compensation for a million. For instance, they often complain when they are not recompensed for treatment of the teeth they had problems with far before buying the insurance policy. It often takes too much time an insurance company representative to explain the insurees the essence and conditions of insurance.
The government has repeatedly announces its plans to introduce compulsory health insurance. Don’t you think that the authorities should also take public awareness raising measures?
Some advocates of compulsory health insurance (CHI) development in the country often hint that the CHI should cover absolutely every medical case, provide patients with extra class rooms with air conditioning, and serve patients without queues and establish treatment standards for every disease. In the meantime, in Great Britain, for instance, to receive spinal hernia treatment under CHI policy, a patient often waits for its turn for several years, for there are too many patients who want to undergo surgery for the CHI tariffs. In such situation, people in Britain often buy also voluntary health insurance policy to undergo surgery as soon as possible though for a much higher price. As I have observed, here in Armenia they plan to introduce tough standards with inclusion of all the possible options into the compulsory program, though CHI provides guaranteed medical assistance, while the VHI improves the terms of CHI.
Mr. Altunyan, over the last 2 years voluntary health insurance tariffs (VHI) grew 30%-40% in average. What are the reasons of the growth? Will the tariff policy of insurers change within the coming years?
Tariffs of the programs in the amount of 80,000 AMD and higher have grown 30%-40%. Medical insurance programs below 80,000 AMD have grown in price over 3fold over the last 2 years. The key reasons are the growing prices of medical services and preparations and extension of insurance programs.
Some big insurance companies engaged in VHI in Russia have their own clinics. Armenian insurers have already learned the experience of their Russian colleagues. Thus, yet in 2009 a medical center “Medassist” was founded in Yerevan. The clinic served mostly the customers of your insurance company. Do you that such investments profitable?
The medical center moved to a more comfortable building in April 2011 and received a new type of license for almost all the ambulatory medical services. The services of that medical center are profitable for our company for their unprecedented low price and high quality. They are profitable also to the insurees, for an insurance company is interested in the quick and final treatment of patients.
It has become a multi-profile medical center…
Sure, a center with its up-to-date laboratory and clinical diagnostics. Negotiations are currently underway for acquisition of the latest model of digital roentgen equipment. For that purpose, the head of the dental service of the medical center left for Finland as the winner of the city competition dentists and to acquire a new dental orthopantomography (OPG) system. An OPG is a panoramic or wide view x-ray of the lower face, which displays all the teeth of the upper and lower jaw on a single film. It demonstrates the number, position and growth of all the teeth including those that have not yet surfaced or erupted. It may also reveal problems with the jawbone and the joint which connects the jawbone to the head. There is no such equipment in Armenia yet. One can speak about that endlessly. The operational, research and laboratory base of the center will be regularly modernized.
How many treatment sections are there at Medassist?
There are 19 at the moment, with another 11 to open within the nearest future. The center will have a small surgical section, day-patient department, room for medical procedures, physical medicine room and others. It will be a full-fledged ambulatory service.
How are insurees of the company served at the center?
The insurees have a right of choice. The only method of influencing that choice is the high quality of services. At the same time, the Center is interested in attracting other customers. So, level of the service is equivalent to the European service.
That is, the Center serves also the customers of other insurance companies…
Certainly, Medassist Center is a self-sufficient establishment. The only relation is that yet before opening the center was oriented at the needs of the insurance market from the viewpoint of professionalism, transparent activity, rationalization of processes, software and others. Like a scenario written for a particular actor, Medassist opened, first of all, for the health insurance policy holders.
As for the system of customer service within the health insurance, I’d like to say that one of the job requirements at Medassist is the knowledge of insurance products of certain companies. In the given case, it is INGO Armenia Insurance Company having a contact for service of its patients. Insurees of other companies visit the Center by choice. They are free to choose any other medical center.
I have repeatedly said and will repeat again that service at the medical center will create guarantees against stealing customers. Medassist is committed to impartial service of insurees of other companies and against stealing of customers through the Center. The more insurance companies are served at Medassist, the more profitable it for the Medical Center.
Is it important for Medassist what company’s customers to serve?
It is impossible to unite all the customers into a single insurance company. Medassist is well aware of that. Supposing that the number of insurees of all the companies is 100.000 people, one company can insure some 30,000 people. So why should the Medical Center refuse from serving another 70,000 insurees? It is necessary to create guarantees of impartial service and prevent stealing of customers at least through medical service.
Mr. Altunyan, there is obvious difference between the service level at state clinics and such modern medical centers as Medassist. There are, probably, price policy differences as well…
The price policy in our Medical Center is rather complicate. The Center serves insured customers, but the service must be economically viable to the insurer and the prices should not frighten the people having no health insurance policies. Therefore, we have to bring our price policy in line with the prices declared by other medical establishments. Here we face a dilemma: many medical establishments in our country declare one price but charge quite different price. Such practice is impossible at our Center. So, we have to search for the ways to intensify and optimize all the medical processes.
Even after moving to a more expensive building with extra equipment we keep serving customers for the existing prices, though profits are insignificant. Sometimes, there is no profit at all. In fact, the Medical Center operates for future effect i.e. we hope that within the coming year the quantity of customers will grow into quality. By the business plan, the Center will get profits in a year or 1.5 year.
What does your company do to upgrade the medical efficiency of voluntary health insurance?
First, we modernize the physical infrastructure. Thanks to the up-to-date laboratory, a blood test result is available in 15 seconds.
I’d like to say that the head of our indemnity service is currently creating an e-queue of patients, which will allow serving around 32 patients per shift instead of current 23.
What do you do for the customers to need no visit to the medical center?
Medical centers must be full with healthy people who visit the clinic for preventive examination. Prevention and early diagnostics of pathologies is what makes the nation healthy.
Preventive medicine in Armenia is possible only by persuasion, enforcement or insurance. We are engaged in insurance.
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