A new report by industry think tank The Geneva Association (GA) has suggested that the $310 billion health protection gap in emerging markets represents a major opportunity for re/insurers to increase their penetration in these regions and protect the most vulnerable.
The GA found that people in emerging markets are finding it increasingly difficult to fund their healthcare needs, as overall expenditure in healthcare is growing faster than gross domestic product.
The share of healthcare expenditure has risen globally over the last two decades from about 8% to almost 10% of aggregate gross domestic product, with higher healthcare costs driven by communicable and lifestyle-related diseases in emerging markets.
However, in these markets, the global trend of higher healthcare expenditure has not led to increased penetration of private health insurance, the GA said, which remains insignificant with a 2% share of total healthcare expenditure.
Based on the relationship between out-of-pocket spending and per capita income, the report estimated that the annual health protection gap in emerging markets is about $310 billion or approximately 1% of these countries’ aggregate gross domestic product.
“Healthcare funding is one of the biggest societal challenges of our time and the insurance industry can play a major role in offering sustainable solutions,” said Jad Ariss, Secretary General of The Geneva Association.
“Health protection gaps in emerging markets require flexible and creative approaches that address the needs of vulnerable people who have so far been denied suitable and affordable access to healthcare,” he explained.
Kai-Uwe Schanz, Director of the Protection Gap research programme at The Geneva Association, also commented: “There is a broad consensus that private health insurance is preferable to out-of-pocket spending which can be financially catastrophic for households.
“With the right regulatory framework, private health insurance can have an important and beneficial effect on the sustainability of health schemes to which individuals, governments and employers contribute.”
From a public policy point of view, private health insurance can help governments in emerging countries to mitigate their population’s vulnerability to catastrophic out-of-pocket spending, the GA suggested.
