Specialist brokers might be well versed selling private medical insurance for expatriates, so why is it so difficult for them to branch out into international protection? Harvey Jones investigates
If you think selling protection for UK-based clients is tricky, spare a thought for brokers and intemediaries dealing with expatriates.
Once a client moves abroad, selling protection products such as life insurance, critical illness (CI) cover and income protection (IP) moves into very difficult territory. It’s almost like a foreign country out there.
Worse, the terrain has got even tougher over the past decade, as most mainstream insurers have lost heart and decided to stick to home ground.
Selling international private medical insurance (iPMI) is relatively straightforward by comparison, and remains the key focus for brokers.
A decade ago, the market for selling protection to expats was strong and healthy, says Tim Harvey, managing director of UK-regulated brokers Offshore Online.
"Most UK insurers would allow you to write business with them, no problem," he says. "Then there was a change in EU law. Insurers had to create an entirely separate fund for international business. Previously, they could jumble all the business together. Writing this kind of protection became too expensive overnight."
Now, brokers might write level term assurance, and perhaps the occasional CI policy, but other valuable forms of cover, such as family income benefit, are no longer out there, Harvey says.
"The EU is increasingly interfering with the provision of arm’s-length advice," Harvey explains. "We often have to wait until the client returns to the UK before we can sell them a product. Sometimes people have to leave one country to sign a document in another country. That isn't exactly ideal. Or they go without cover altogether until they finally return to the UK for good."
OUT OF THE MAINSTREAM
Harvey says expat life insurance should be a mainstream product, but in practice it is highly specialist.
"Most of our sales are in the Middle and Far East, China and Latin America," Harvey says. "We do have clients in Russia, but getting underwriters to cover them isn’t easy, because personal safety is a big issue."
One "good old-fashioned insurer" does offer life cover: Friends Life.
"There are precious few others. I would like to see a big insurer such as AXA enter this market," Harvey says.
Steve Nelson, sales manager at April Medibroker, says very few of his iPMI clients ask about life cover, and even fewer about critical illness.
"There aren’t many insurers we can place individual business with," Nelson says. "Friends Life, William Russell and Expatriate Healthcare are the only ones we use. We also arrange group life insurance through Lloyd’s of London. If you go direct to the market with a group they will give you a price."
International life cover tends to be more expensive than standard UK policies.
"Even when we are asked to quote for cover, the cost is often so high our clients don’t want to know," Nelson continues. "I can't see why somebody living in Dubai should pay appreciably more for life insurance than somebody in the UK. After all, the payout is just the same."
Many expats take a chance and go without life cover, Nelson says.