Bupa Braced for Big Hit In Chile

Global iPMI and healthcare analyst Ian Youngman, takes a look at Bupa problems in Chile, and why companies need a better understanding of the countries they operate in.

• Bupa is braced for a £229 million hit in Chile.
• A Supreme Court case in Chile threatens the future of its operations in the country.
• The ruling, made last year, found that the firm’s policy of setting health insurance premiums based on gender and age were unconstitutional and demanded that compensation be issued to all customers affected.
• A preliminary assessment by the Chilean health authorities found that Isapre Cruz Blanca, a subsidiary of Bupa, would face repayments totalling £229 million under draft legislation, a figure that Bupa warns is likely to increase over time.
• In Bupa Chile, the regulator- approved GES7 pricing increases in the Isapre business in October 2022 significantly reduced reported losses.
• Bupa warns there is inherent political and regulatory uncertainty surrounding the implementation of the Supreme Court judgement.
• Depending on the outcome of the current uncertainty, the judgement could result in material liabilities arising and material losses within the Isapre Cruz Blanca business.

Analysis

• Chile is one of Bupa’s biggest markets outside the UK, generating more than £1 billion annual turnover.
• The outlook for this business remains uncertain as regulatory interventions and legislative and judicial decisions remain unclear around the Isapre insurance sector.
• Bupa has never hesitated to exit countries and business that is a problem or loses money.
• Bupa Chile offers an integrated model of healthcare services, offering insurance and healthcare.
• Bupa Chile is one of the country's leading healthcare groups.
• Bupa Chile has 789,000 health insurance and 2.5 million healthcare customers.
• It offers IPMI via Bupa Global.
• Leaving Chile may not be simple as it could leave it with debts but not new income to pay the bills.
• Bupa sees LatAm countries as part of its global future and exiting a country could send the wrong message to local brokers and authorities – particularly in countries it wants to enter.
• Sudden legal changes in LatAm, African and other countries are not unknown- and insurers have a tendency to get blind sided by events.
• Every company should have a strategy for each country it is in with contingency exit plans for unexpected political, weather, and legal changes.   

What Next?

• The deadline for the implementation of a new policy for setting insurance premiums has been extended to November 2023.
• Bupa admits that the outlook for the Isapre business remains uncertain as impact of regulatory interventions and judicial decisions remain unclear.
• Bupa could suck up the financial hit as a cost of doing future business in the region.
• Insurers need to have better understanding of the risks and opportunities of the countries it is in or wants to enter.

The latest information, facts and figures on iPMI and international health insurance

Looking for iPMI country profiles? Struggling to find the correct information on healthcare systems overseas? The iPMI and global health insurance report, International Health Insurance 2023, provides 177 country profiles along side hundreds of pages of company profiles and need-to-know iPMI market intell. Download the full report, click here.