A complex market

Following on from an exploration of the insurance market for international students heading to the US for further education, in the next part of our series, ITIJ considers the health insurance needs of students who choose to study in other countries around the world, and the challenges associated with providing these unique policies

Over 300,000 US students studied abroad for academic credit in 2014/15, an increase of 2.9 per cent over the previous year. Additionally, more than 22,000 students participated in non-credit work, internships or volunteered abroad. According to the Open Doors report from the Institute of International Education, 12 per cent of US study abroad students head to the UK, 11 per cent go to Italy, and nine per cent study in Spain. Other popular countries are France, Germany, Ireland, China, Australia, Costa Rica and Japan. In total, 170,000 American students ended up in Europe, 16 per cent in Latin America, and 11 per cent in Asia.

Almost 50,000 Canadian students studied overseas in 2014/15, according to the UNESCO Institute for Statistics. Most headed to the US (28,454), with the UK, Australia, France and Ireland also proving to be popular destinations. From Australia, meanwhile, there were 12,026 students studying abroad in the 2014/15 academic year, again with the US being the most popular destination, followed by New Zealand and the UK. South American students have also been increasingly seeking qualifications from higher education establishments overseas – over 40,000 Brazilian students left the country in 2014/15, with most headed to the US. While the number of Chilean students studying abroad is lower, at just under 10,000, again, most were going to the US.

The market for international health insurance for Chinese students studying abroad is perhaps the most important for insurers to take note of. The total number of students heading overseas for further education rom this country is a staggering 801,187. Almost 300,000 of them head to the US, almost 100,000 go to Australia, while the UK and Japan are almost as popular with over 80,000 students studying in each country.

Outward bound – regulations apply

The tens of thousands of students heading to European countries who are not part of the Schengen Area need to prove they have medical insurance to the value of €35,000 in order to secure their visa. Whether this is through long-stay travel insurance, or through their international health insurance policy, is optional.

With regards to the UK, those applying for a Tier 4 student visa from 6 April 2015 and coming to the UK for six months or longer will be required to pay a £150 annual immigration health surcharge as part of their visa application fee. If a student is studying in the UK for three years, the charge would be £450, which must be paid at the point of application for a Tier 4 visa. This is in addition to the standard visa application fee. Visa applications will be refused if the student has not paid the surcharge as part of their application and delayed if they have not paid the correct amount. The surcharge gives Tier 4 students free of charge access to NHS care in the same way as a UK resident at a hospital, healthcare centre or doctor’s surgery. However, some exceptions exist for expensive discretionary treatments. Some dental or optical treatment and medicines prescribed by the doctor may need to be paid for.

Manny Soar, president of the International Association of Student Insurance Services, noted that in some destinations, it is becoming more difficult for students with an international health insurance policy to obtain a visa. “For example, Austria will only accept a local all -isk public/private health insurance in line with Austrian law,” he explained. “This costs around €200 per month! South Africa also insists on a local health insurance.”

It is a requirement of the Australian government that those who want to study in Australia must have a valid Overseas Student Health Care (OSHC) policy. The provision of OSHC for students studying in Australia can only be made by health insurers who have signed the Deed for the Provision of Overseas Student Health Care. The Deed sets out what insurers must cover, and what they do not have to cover. Only a small subset of the Australian health insurance market has signed the Deed and are officially able to provide OSHC cover. Currently, the only health insurers able to provide OSHC cover are: Australian Health Management OSHC, BUPA Australia, Medibank Private, Allianz Global Assistance OSHC (formerly OSHC Worldcare), and NIB.

According to OSHC Australia, a website that was set up purely to help international students find the right policy for their needs, many local universities and education institutions have a preferred provider deal with a specific insurer. Some of the benefits of choosing this provider can be on-campus claiming, bulk billing on campus resulting in savings, and potentially wider benefits.

The destination of the student, then, has a significant impact on the insurance required.

Jack Yuan, CEO of AXA Tianping – Health Business Unit, explained that the health system of the destination country is a key concern for an insurer providing these kinds of policies, saying that the process behind visiting a clinic or hospitalisation, for example, is likely to be very different from that which the insured is accustomed to at home. “We design the product with this level of awareness in mind, ensuring that if a student needs to make a claim, the process is straightforward. To achieve this, our products offer a bilingual policy and claims procedure, so that students can read or speak to someone in their native language. This includes direct billing, so that students don’t have the added stress of paying the hospital in an emergency situation,” he said.

Allianz Worldwide Care was keen to emphasise that for providers of international health insurance, adherence to local and international regulations is a key consideration. Andy Seale, global head of sales and distribution for the company, explained: “The very nature of international student health insurance means you are dealing with students who are globally mobile, so it is vital for us as insurers, to ensure we are compliant and that our offering is in line with their visa requirements, where relevant,” he said. “Often, students will be required to provide evidence of their health insurance policy before the country they intend to travel to will actually grant them a visa, so we need to be able to advise them on the best product to suit their individual needs. The complexity of the international student health insurance market is very much pre-destined by the country involved.”

Sarah Dennis, head of international for The Health Insurance Group in the UK, agreed that the intended destination of the student is essential information for an insurer or intermediary, as well as duration of stay, so that the policy fits the needs of the holder. “It is also key to understand if they have any pre-existing or ongoing medical issues as these will need to be addressed when sourcing cover,” she said. “Evacuation and repatriation cover is generally vital if they have travelled without families relocating with them because in the event of an emergency, accident or long-term illness it will be highly likely that they would return back to their home for treatment.”

Key differences

ITIJ spoke to Rene Gillet from Dr Walter, about how these kinds of insurance policies are different than others on the market, and why it is therefore so vital that international students are aware of these differences. “They cover acute illness and accidents and usually do not cover preventive examinations, check-ups, foreseeable and planned treatments. They have restrictions on pre-existing conditions (either they are not covered at all or they cover only the acute recurrence), mental health issues (sometimes they cover acute events up to limited amounts but they would not cover psychotherapy) and on pregnancy and childbirth (they often cover acute life-threatening situations but do not cover the regular childbirth and check-up treatments),” he explained. “Coverage of dental treatment is usually limited to a certain amount for pain relieving treatment.”

David Wood, product and distribution manager, property and travel at Endsleigh Insurance in the UK, said: “The main difference between this type of insurance and standard long-stay trip insurance is the coverage of course fees, which is a key element and likely the largest element of financial jeopardy.” Sarah Dennis added: “Long-stay travel insurance should not be seen as a replacement for medical insurance; especially if a student is going to be away from home for a long period of time or currently has medical conditions that are being managed in their home country. Most travel policies offer a good level of medical cover but in general this benefit is only available in the event of an accident or emergency. Many students and families make the mistake of purchasing travel insurance as a replacement for health insurance, but if a student is overseas or away from home and develops a condition that is not a result of either an accident or emergency and needs long-term care then it is more than likely that the travel policy purchased is not fit for purpose and could result in the family having to spend or raise a lot of money to cover the cost of any treatment or even a full repatriation.”

Students from different parts of the world will have varying concerns and, thus, it is important that the policies on offer address the issues that are important to them. For instance, according to Alexia Keglevich of AssistCard in the US, South American students heading overseas will look for two main points of cover when they are considering which insurance policy is right for them. She explained that cashless services are essential: “As they will be away from home for a rather long period of time, they don’t want to shoulder medical expenses and then wait to be reimbursed,” she said. “Particularly given the fact that most these students travel to the US, Canada, Australia and Ireland where medical bills amount to very serious money.”

Easy access to assistance services, she added, is another must-have: “They look for travel assistance companies that are easily accessible through the internet or smartphone applications as most of them don’t want to use their phones in order to avoid additional charges.”

Yuan from AXA noted: “Our student-focused product, StudentCare Exclusive, is specifically designed to support the growing number of Chinese students studying in the US. So, as well as ensuring the product meets the requirements of US universities, we also have to consider what’s customary from a medical perspective for that customer segment. StudentCare Exclusive covers STDs, alcohol, drug and substance abuse, as well as contraception and mental health, as these areas of cover are considered the norm in the market.”

Claims rates

According to Gillet, when it comes to claims, there is nothing really out of the ordinary that should make underwriters run for the hills if they are approached to design an international student health plan. Many students file claims for simple colds or infectious diseases, he said, but also accidents, especially sports accidents but also traffic accidents are on the rise. “We have the impression that students often underestimate the risk of an accident and then these accidents also happen due to negligence once they have adapted themselves to a new environment abroad,” he said.

And while there has generally been an increase in claims levels lately, this could simply be down to the fact that the number of students who head abroad for part of their study is also on the rise. Gillet did note, though, that students from Latin America who go to Europe or the US and take part in winter or high-risk sports for the first time, is notable as a group from which many claims will stem.

Wood at Endsleigh Insurance said that with the majority of student policies, regardless of whether they are in the UK or overseas, most claims are for gadgets, laptops, mobile phones and general baggage. “Fifty-seven per cent of claims are for medical assistance, 22 per cent for baggage, with the remainder split across the other cover sections,” he said. Sixty per cent of Endsleigh’s policyholders study within Europe, so the majority are relatively close to home when it comes to repatriation, while the European Health Insurance Card (EHIC) could also be utilised by policyholders to help contain the cost of claims within the European Economic Area.

Keglevich of AssistCard said that for her company, the claims ratios vary according to the length of the trip, but that it generally ranges from seven to 20 per cent for long-stay international students. The most sought-after benefit, she added, is for medical expenses.
For AXA’s StudentCare Exclusive plan, meanwhile, doctors’ visits constitute the most common claims, followed by check-up appointments.

Could do better?

Manny Soar, president of the IASIS, believes that ‘all providers are lagging behind on mobile and digital delivery of both the product and services as would be expected by millennials as the native digital generation’. He added: “Linked to the above is the education of students on the importance of insurance and the exact cover that would fit them.”

Rene Gillet from Dr Walter spoke about the challenges of offering these products. He said: “For us, a broker with a high-quality approach, the challenge is to find an underwriting insurance company that is willing to cover any or almost any kind of sports in medical insurance, to provide coverage for the acute recurrence of a pre-existing illness, to provide coverage for mental health issues, and so forth. At the same time, the policy should have a price that works on the market or the markets/countries that you want to sell it to.”

It is fair to say that the international student health insurance market is a complex one, with an array of regulations and restrictions to consider. However, for those companies willing to overcome these hurdles and offer students what they are really in need of, the potential is huge.