Inclusive underwriting key to meeting rising healthcare demand in Asia

November 6, 2024 / 5 min read

Against a backdrop of fast population growth, a rise in noncommunicable diseases (NCDs), medical advancements, longer life expectancies, and a rising middle class, the demand for healthcare in Asia has never been greater.

While Asia has many established public healthcare systems, the level of coverage, accessibility, and quality can vary. Growing numbers of people therefore are turning to the private sector for its faster service, greater flexibility in choosing providers, and access to a wider range of specialised treatments. Rising affluence is a key driver, with Asia’s middle class expected to grow from 2 billion to 3.5 billion by 2030.

At the heart of this transition from nonprofit systems to for-profit private healthcare lies the key issue: how to extend access to private healthcare for those with pre-existing conditions in a profitable and sustainable way.

doctor-consulting-with-patient-at-hospital

Private health insurers commonly exclude chronic conditions or alternatively apply long waiting periods, typically 12-48 months.

Traditionally, health insurance has used a conservative risk assessment model. Insurers often exclude individuals with pre-existing medical conditions, decline the sale of a policy altogether, or impose lengthy waiting periods or disproportionally high premiums to account for perceived higher risks.

This risk-averse approach can create gaps in cover and out-of-pocket expenses for customers with pre-existing conditions. Common conditions such as hypertension, high cholesterol, musculoskeletal conditions, diabetes, and other chronic ailments frequently disqualify individuals from obtaining comprehensive coverage.

As competition among health insurers rises, this risk aversion can result in missed opportunities where there is a clear consumer demand for inclusive health insurance policies and a clear opportunity to insure a wider book of business.

The challenge of insuring pre-existing conditions often comes down to the lengthy processes associated with underwriting them, rather than the perceived higher risk. Medical expertise is often not immediately available—but it is required to understand the potential impact of pre-existing conditions on ongoing costs, as well as future expenses if a condition deteriorates. These challenges can reduce distributors’ appetite to sell policies that may trigger a poor consumer experience for customers with pre-existing medical conditions.

Advances in underwriting technology supported by medical expertise can play an important role in solving this challenge by helping insurers provide more inclusive insurance. This can increase sales to a previously underserved customer segment, improve the overall customer journey, and significantly reduce manual underwriting intervention.

Pre-existing conditions and shifting attitudes

As demand on public health systems increases, governments may turn to private healthcare to reduce the burden on the public purse and increase the overall health and well-being of the population. However, private health insurers commonly exclude chronic conditions or alternatively apply long waiting periods, typically 12-48 months, or impose disproportionate premium increases—but this is set to change.

One example of this shift is Hong Kong's Voluntary Health Insurance Scheme (VHIS), a government-backed initiative launched in April 2019 to encourage citizens to purchase private health insurance while ensuring better coverage and transparency in private healthcare services. The programme aims to relieve the pressure on the public healthcare system by offering standardised insurance plans with more comprehensive coverage than traditional private insurance policies.

Another example of the insurance landscape becoming more progressive is Singapore, with its MediShield Life programme offering a basic health insurance plan that protects all citizens and permanent residents against large hospital bills regardless of age or health condition.

Singaporeans often still buy private medical insurance that complements MediShield Life, known as Integrated Shield Plans, for enhanced coverage, faster access to specialists, or shorter waiting times. Private insurance policies often offer riders that cover copayments, deductibles, and other out-of-pocket expenses not fully covered by MediShield Life to reduce the amount they must pay in the event of a claim. However, many private insurance policies still exclude pre-existing conditions.

In South Korea, 87% of the population resort to private health insurance for supplementary and complementary coverage in response to the high co-payments associated with the National Health Insurance plan. Other Southeast Asian markets such as Thailand, Vietnam, the Philippines, Malaysia, and Indonesia have all taken great strides to achieve universal health coverage (UHC), defined by the World Health Organization (WHO) as the means to provide all people with access to quality health services without enduring financial hardship. Against the backdrop of rising healthcare costs and the increasing difficulty of managing chronic conditions within public healthcare systems, this may be an area where private insurance could ease the burden.

Throughout Asia, many regulators and insurance associations are advocating for more progressive insurance policies that are transparent, fair, and inclusive. The Insurance Regulatory and Development Authority of India has recently reduced the maximum waiting periods set out in health insurance policies from 48 months to 36 months. China has also shared guidelines for strengthening insurance cover for the elderly, disabled, and people with chronic diseases.

Automation creating opportunities for insurers

In almost 25 years of experience in automating medical underwriting, Verisk has found that the limited appetite to provide cover for insurance applicants with pre-existing conditions is often due to the lengthy process to analyse the risk of each customer in detail.

Medical underwriting can be laborious. Customers or insurers commonly need to complete lengthy medical reports and supply supporting evidence from a doctor or specialist, often at a cost. Even following this lengthy process, the risks posed by the customer’s pre-existing conditions are frequently considered too high, and the policy is declined or conditions excluded from cover.

Verisk captures large amounts of medical screening data through its medical risk assessment and underwriting tools for travel and health insurance. From 40 million screenings carried out each year, the most frequently declared conditions of customers using our tool :

Hypertension (21.4%)
High Cholesterol (9.1%)
Asthma (6.1%)
Hypothyroidism (2.7%)
Gallstones (2.6%)

For the majority of these conditions, medical treatment is well established and effective, meaning there is extensive opportunity to offer cover for these conditions, price accordingly, and increase sales volume.

As the demand for accessible healthcare and inclusive insurance policies continues, automation will be key to serving this untapped customer base.

Verisk is a strong advocate and enabler of inclusive insurance, recognising the potential for sustainable growth through the automated risk assessment of pre-existing medical conditions.

Visit our website to learn more about the Health Risk Rating Tool.

This chart shows the rise of the Asian Middle Class, 2020, World Economic Forum, < https://www.weforum.org/agenda/2020/07/the-rise-of-the-asian-middle-class/>
Extending social health protection: Accelerating progress towards Universal Health Coverage in Asia and the Pacific, 2021, International Labour Organization, <https://www.ilo.org/publications/extending-social-health-protection-accelerating-progress-towards-universal-0>
Non-communicable diseases in South-East Asia: journeying towards the SDG target, 2023, The Lancet Regional Health – Southeast Asia, <https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10667301/>
Coverage for Pre-existing Conditions, Ministry of Health of Singapore, < https://www.moh.gov.sg/home/our-healthcare-system/medishield-life/what-is-medishield-life/coverage-for-pre-existing-conditions>
The role of the private sector in Asia: challenges and opportunities for achieving universal health coverage, 2023, World Health Organization, < https://iris.who.int/bitstream/handle/10665/366642/9789290210290-eng.pdf?sequence=1>
India: Regulator slashes pre-existing disease waiting period from 4 to 3 years, 2024, Asia Insurance Review, <https://asiainsurancereview.com/News/View-NewsLetter-Article?id=87871&Type=eDaily>
China unveils guidelines for promoting high-quality development of inclusive insurance industries, 2024, National Financial Regulatory Administration, < https://english.www.gov.cn/news/202406/06/content_WS6661b5f5c6d0868f4e8e7e1a.html>