Q3 Global Health Trends
Overview
Throughout the pandemic, Aon has monitored insurer responses, especially, from a pricing perspective. Uncertainty remains around the impact of significant reductions in medical plan utilization and what the rebound may look like, as well as the forecast for longer-term morbidity and mortality factors. While it would be incorrect to describe the market overall as volatile, we have seen different pricing behavior across different markets and products, and anticipate this will continue.
The timing of the medical claims rebound, the impact of return to work rates on long-term disability schemes, local market conditions, and individual scheme performance are all factors that will play a key part in pricing and other renewal terms offered.
People risk issues are increasingly complex and interrelated
The COVID-19 pandemic is well into its second year and within this context employers are having to address an increasing number of complex and inter-related people risk issues, including:
- The talent challenge of trying to attract and retain the best workers to underpin future business growth1
- Adopting new working models while maintaining workforce engagement and connectivity
- Addressing social justice issues related to Diversity, Equity, and Inclusion
- Linking employee health, employee benefits and total rewards to the broader sustainability agenda
- Declining population health due to ageing, poor lifestyle habits and increased prevalence of chronic conditions
- Rising costs and workers having vastly different needs and expectations
- Enhancing workforce resilience and improving workforce wellbeing
The situation remains fluid with regard to the ongoing effect of COVID-19 on workforce health and health-related coverages, such as life assurance, disability and medical. In many countries, the impact of deferred diagnosis and treatments, both on medical plan utilisation and health outcomes for individuals, is still unclear; however, from a medical plan perspective it does appear that utilization levels are normalising to pre-pandemic levels, or at least are forecast to do so by the end of H1 2022. 1 https://theonebrief.com/the-great-resignation-retaining-talent-in-a-job-hopping-world/
Pricing across core health and protection products is mixed, calling for proactive efforts to optimize pricing and coverages
Overall, and consistently across our major markets, we anticipate a challenging renewal cycle for medical insurance portfolios. More detail on the key risk factors and how employers can address these challenges can be found in our 2022 Global Medical Trend Rates Report.
As employers start to prepare for the upcoming renewal season, the table below provides a snapshot on how different lines of health and protection insurance are being impacted across the globe.
Renewal Pricing Indications
The information contained within the table is indicative based upon Aon broking experience of expected average outcomes, scheme specific factors will influence actual pricing outcomes. In the Netherlands the premium increase of the health insurers will not be announced until mid-November. Currently we only have estimates from the state department of Public Health.
Wellbeing strategies build resilient workforces and help optimize renewal outcomes
Understanding the pricing characteristics of the markets is important but is not the whole broking story. In addition to delayed diagnosis and claims costs in some markets, Aon data also suggests that the increased prevalence of key medical conditions, such as mental health, musculoskeletal, cancer, cardiovascular disease, and diabetes means that employers will continue to face the prospect of added organizational costs and employee productivity losses unless the controllable factors contributing to these patterns are effectively addressed. The renewal outcome is largely a reflection of the people risk management strategy in place.
Employers who typically have the most resilient workforce and optimize their renewal outcomes, or indeed their program funding strategy, will be those with a well-defined and well-implemented wellbeing strategy. Better access to care for all, being more proactive in supporting employees in adopting healthier habits, and championing a culture of personal and organisational resilience are some of the ways the employer/worker relationship will evolve. Linking this back to renewals, it should serve as a reminder that simply testing the markets and hoping for the best based on market conditions is not the most robust strategy. Testing the market is important, but having an approach that understands employee risks, educates employees, and supports workers to become the architects of their own health - and being able to evidence this as part of the renewal conversations should lead to better outcomes. The underlying message remains the same: never has there been a better time for the employer, broker, and insurer to link the pricing element of the renewal with the health management aspect.