Tuesday, July 7th 2020
Regarding PA Group Leaving the Insurance Market
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We have been getting a lot of questions from people—many of whom are not our clients—about one of our insurers: PA Group. We have decided to release a public blog post about what we know in order to help answer everyone at once.
- In Short:
We have officially received notice last week that PA Group is exiting the marketplace and that many of our clients will not be able to renew their policies in this upcoming year.
- What Happened?
We found out recently that PA Group has been trying to sell off their portfolio to exit the health insurance market. Over the last two years, they attempted to raise rates to justify the rising cost in Mexico, but this did not solve their issue of policies losing money, and they decided to leave the marketplace instead of continuing to modify their products and rates to adjust to the changing market.
The first sign that brokers received that anything was happening was a random notice that a large portion of our higher-end policies were being sold to another entity, NOVUS. This only affected our “Premier Health” clients, however, and the rest of our WEA clients were not affected by this transaction. After that, we were informed we could no longer sell or renew their insurance products. PA Group is still the holder of these policies that a majority of expats have, and Novus is not involved with this decision.
- What About Claims?
We are still getting claims paid out bi-weekly by PA Group —albeit on a slower time frame than normal. If you are a client of ours and still have any outstanding claim payments, please contact our claims manager to get your claim escalated for payout before moving providers.
- What We Have Decided to Do:
Once we got the first notice, we began negotiations with other insurance providers to see if we could find a home for our portfolio. One of the main difficulties with a transfer like this is that we do have a large portion of clients who are now considered uninsurable due to previous medical conditions or advanced age. Also due to the increased cost of insurance and care in Mexico, it has been difficult finding alternatives that are affordable.
There is always an option to move our healthy clients one by one to new insurers, but this leaves the uninsurable clients without an option to remain insured and we only considered as a last resort to make sure everyone is taken care of.
It is for these reasons that we have decided to do a block transfer of all of our clients at once. This involves underwriting the health of the entire portfolio together so that the individual client’s health or age does not make it as large of an issue for underwriting.
- Prospective Carriers:
The main carriers we looked at that could help fill the gap caused by this situation are VUMI, RedBridge, and BMI. Some other honorable mentions we considered are Cigna, Geoblue / BUPA / HTH, Allianz, Azimuth Risk, or Mapfre. For a variety of reasons, we did not move forward with these other carriers as our main options. If you’re interested in any of the carriers mentioned above, you can talk to a broker by filling out this form.
Why These Carriers?
Financial Stability – BMI and RedBridge are AM rated, which is very important for us brokers to prevent situations like what has just occurred with PA Group in the future. VUMI is not AM rated, but they have a strong reinsurer and do release partial financial statements yearly for brokers.
Underwriting – RedBridge was the only carrier that agreed to take on all of our clients with minimal underwriting, meaning they would take on our clients with conditions and ages over 75. As mentioned above this was a major deciding factor for us as we wanted to have an option for all of our clients. VUMI and BMI have not agreed to this, so if you choose them it will just be like applying for a new application.
Covid Coverage – Many insurers are not covering covid-19 anymore. VUMI and RedBridge both have pandemic exclusions, but their executives have extended temporary coverage to cover covid-19 at 100% of policy limits. BMI does not have a pandemic exclusion at all, meaning that regardless of what happens with the pandemic, you will remain insured under your policy limits.
Cost – VUMI and RedBridge both have very competitive rates, with the main advantage being that they can exclude US coverage from plans for lower cost. BMI cannot exclude US coverage yet, so for many full time expats that don’t need US coverage, the rates will be higher than the first two providers. BMI will remain a great option for people wanting global coverage including the US, or people looking for a more comprehensive policy with guaranteed stable rate increase.
Direct Pays – BMI and RedBridge have agreed to bring on medical providers of our choice for key regions without any restrictions. VUMI is similar but they do have a small blacklist of specific hospitals. We do expect other carriers to follow VUMI’s lead in the future however. Many hospitals in Mexico have grown very predatory on their pricing and are forcing insurers to direct their clients to other healthcare facilities. Most insurance plans only cover up to UCR, which means bills at these institutions may leave you with a large out of pocket expense if the insurer determines that the prices are too high for the region. Please ask around in your region or ask your broker for good competitive hospitals ahead of time. It helps to get second medical opinions for planned procedures, and to check your local embassy for advice on which hospitals to use or avoid. Here is the US Embassy List and here is a sample warning for Cabo.
What Can I Do?
If you are not our client, we can only offer you a new application for our insurers.
If you are a current client we will contact you when you have your renewal with options to transfer. You will simply need to fill out a transfer delcaration form to move your policy over to RedBridge, or a new application with one of our other carriers.
Again if you have any questions, please reach out to us.
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