Rising Interest for Better Healthcare Spurs Insurance Demand

The health insurance industry in Southeast Asia is slated to grow to US$24 billion by 2020 at a compounded annual growth rate of 15%, from its previously valued size of $6 billion in 2010.

 

According to a new study by Roland Berger Strategy Consultants entitled, "Southeast Asia – The New Frontiers for Health Insurers", the next six years will see increasingly affluent consumers in the region drive demand for health policies to pave access to more advanced healthcare.

 

"As disposable incomes and the number of wealthier consumers spike in the region, personal health is fast becoming the number one priority for them," said Philippe Chassat, Partner and Head of Financial Services Southeast Asia, Roland Berger Strategy Consultants, and a co-author of the study.

 

Chassat referred to this prosperous group as the Mass Affluent, a group of consumption-heavy consumers consisting more than 17 million households, where 69% of them reside in the six largest economies in Southeast Asia.

 

"With proliferation of wealth, people are prepared to pay more and in return, they want to avoid the long waiting time, access to the safest and latest medical technologies, and be given the assurance to get the best logistical support from top healthcare facilities."

 

Insurers in the region also stand to benefit from the growth of group corporate policies, where the segment – consisting of multinationals, large domestic corporates and the upper-end of SMEs – is slated to increase share of premiums from an estimated 20-25% in 2010 to 35-45% by 2020.

 

Growth in Singapore to rise
Despite a smaller domestic consumption base, the study highlighted Singapore – Southeast Asia's most-developed health insurance market and home to one of the best healthcare infrastructures in the world – still has growth potential, attributable to more than just rising incomes.

 

"Locally, health insurance is fast being realised as an investment, rather than a 'commitment'," said Chassat, adding that this mindset is changing due to longer life expectancies and rising out-of-pocket expenditures. Expenditures are expected to rise more than 80% by 2020 in Singapore, to $3,232 per capita from the 2010 figure, $1,785, according to projections by Roland Berger.

 

Concurrently, PA & Health insurance premiums are expected to rise fourfold from $1.7 billion to $6.8 billion.

 

In addition, the recent Government announcement to increase public funding for healthcare is a positive event for health insurers.

 

"Even though access to basic healthcare is slated to be a mainstay, demand will come from the desire for more sophisticated protection products that provide access to advanced healthcare, without jeopardizing lifetime savings," notes Chassat.

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