For everybody, but not everybody has it

After US$3.5 mln was stolen from the Compulsory Medical Insurance Fund by its director, Talapker Imanbayev in 1998, there has been no state-mandated medical insurance in Kazakhstan.
Now, the state provides the population with a guaranteed volume of free medical service, but those who do not like this service go to private clinics or utilize insurance firms.

Madina Islamova

Figures and Companies
As of the end of June 2005, 25 out of 36 total insurance firms maintained licenses for the provision of voluntary medical insurance (VMI). This means that only 70% of all insurers are potential suppliers of VMI services. However, not every firm out of those with licenses for VMI services provide medical insurance, as this sector of the market does not operate with such turnover as other types of insurable risks might provide. Besides, in this sphere the claim coefficient is about 70-80%. This is why it attracts only two categories of insurers. This includes companies that, knowing the prospects of this sector, remain on the market by covering any losses at the expense of other types of insurance, and those that specialize only in VMI provision.

Permit us to present some data supplied by the Financial Supervisory Agency (FSA) as of the end of June 2005. The volume of claims remains at a high level. Over the first six months of the current year, they totaled KZT608.571 mln. In comparison with the same period in the previous year, the claim volume has increased by 37%. The FSA report distinguishes those companies that have the highest percent of consolidated premium volume for VMI.

Interteach – 32.5%
Kazakzinstrakh – 17.6%
Oil Insurance Company (NSK) – 14.5%
Pana Insurance – 5.5%,
Eco Policy – 3.9%

FSA’s information as of 1st November 2005 already shows changes in the list of the top five providers, with regards to premium collection. The table below shows the ten largest companies (please note that financial information is in thousands of tenge).

Most of the insurance companies are registered as joint stock companies, and operate in Almaty (86%). The largest companies have built up their branch network all across Kazakhstan. The insurance companies themselves are financial institutions, and all operations related to the provision of medical care are contracted to service providers, which connect the insurer with the medical facility. The service providers are the responsible party in checking the quality of medical care provided by the medical facilities. The insurance firms have opened their own subsidiary service providers, or have contracts of cooperation with existing ones. An example of a successfully developing service group is the International Assistance Group (IAG), which provides services beyond the field of medical care.
The leader on the VMI market is Interteach, which was established in 1989. “All other companies are on the same level as regards to their specifications and development,” stated Aidos Yestimesov, head of the underwriting department at NSK.

What Is Offered?
Among the services on offer are outpatient services, prescription reimbursement, premium hospitalization, sanitarium and health resort treatment, standard medical examinations, and others. By purchasing medical insurance, a person removes himself from the situation of needing to stand in lines at state medical institutions. According to the insurers, primary care physicians are literally taking insured patients by the hand into the offices of specialists. We are presenting the following table in order to provide you with a more detailed understanding of the VMI market and pricing.

Customers
As we may ascertain from the table, not every insurance firm services individual clients. Besides, the cost of corporate insurance per person is lower than that for individuals. However, there are firms having an aim for the immediate future of increasing the volume of individual customers. According to Zhenis Isabekov, an expert from Altyn Policy, a large portion of the population remains without private medical insurance, but the need for this insurance product is very high. Children, pensioners and the self-employed should become the next target group of the insurance firms.
Most of all, large companies utilize VMI services, but as for individual clients, they are usually from the foreign community. Often, medical insurance is provided for the employees of those companies operating in the field of natural resource extraction, as well as related industries. The players on the VMI market are oriented toward the large corporate clients. For example, representatives from BTA stated that individual clients comprise 30% of their customer base; however, due to the fact that the insurance culture within the country is on the rise, the company is planning on achieving a 50/50 ration by 2007. In working with corporate clients the risk to profit decreases, and aside from this, when completing a contract with an employer, the insurance firm receives a larger quantity of total number of individuals insured. Moreover, an opinion exists that employees receiving medical insurance as part of their compensation package do not maintain a target of utilizing the maximum quantity of medical services provided. Medical insurance coverage is considered to be a sign of prestige for an employer, as well as a stimulus for increasing employee loyalty.
As a rule, those not working for the types of employers mentioned above have hardly heard of, or know very little about, VMI. If we compare medical insurance with such banking services as deposits and credits, the former is by far less promoted. Experts believe that in the current stage of development of the big insurance firms, a significant share of new clients make their decision as per the recommendations other large clients. The specialists have stated that attracting clients through the utilization of mass advertising is not as effective as it might be for other financial products.
In speaking about customers on this market, in which the state is itself one of the huge purchasers of insurance services, a note about the Kazakhstani law, “On insurance”, is worth remembering, particularly Article No. 44, which states that citizens of the republic have the right to a guaranteed volume of free medical assistance. Those who desire additional medical services above the guaranteed minimum provision may pay for such themselves, or can receive access to them through an employer, utilizing the VMI system. However, not all people are aware of their rights to free medical services as per the above-mentioned law. As research carried out by Altyn Policy shows, only 20% of respondents were aware of the fact that they are eligible to receive free medical services at hospitals and health sanitariums in the region where they are registered. But, those citizens not receiving referrals from a primary care physician cannot utilize the services of a specialist, not to mention access to specialized clinics. This is why quite often they end up paying for access to medical services anyway.
The third subsection in Article No. 44 states, “Citizens have the right to freely choose a medical services provider, as well as a doctor.” According to Ainur Sabyrova, an underwriter at NSK, this right of free choice significantly complicates the work of an insurance firm. “In our company, any client can receive treatment at different clinics within the framework of the program, which is, for instance, not acceptable within the system of medical insurance in Russia. Healthcare providers must constantly reconsider expenses associated with the treatment of patients,” she explains. One more problem within this market is the fact that insurance firms do not provide insurance to those aged 65 or above, or children under three. The insurance also does not cover a range of health problems that are covered under the state program, such as oncological, psychiatric, TB, and diabetes.
Representatives of IAG have noted that the administrations of medical institutions have the aim of taking advantage of the clients of insurance companies, using the principle of “all your treatment will be covered”, and the virtual monopoly of the large state medical institutions are severely hindering VMI.
P.S. At the end of August 2005, there was an attempt to define and discuss the weak points of this market at a roundtable on issues of VMI, which was conducted by PAVE, an analytical company. This certifies the fact that the players on this market are interested in improvement. Besides, representatives of insurance firms have begun speaking more often about the necessity to develop a special law on VMI, as well as a code of ethics.