Managed Healthcare Executive - October 2008 - (Page 8)

NEWS ANALYSIS More insurers selling in China David Edwards/Getty Imgaes Setting up shop requires international expertise and patience with investment horizon BY SHELLY REESE CONTRIBUTING EDITOR NATIONAL REPORTS — The Olympic torch may have been extinguished, but China is still very much in the spotlight, particularly for insurers. In June, Aetna joined WellPoint, UnitedHealth Group and a few others in establishing operations in China. Although insurers like Aetna already sell insurance products to ex-patriots and multinational businesses operating in China, Chinese regulations require them to establish operations in China if they want to sell their products more broadly. What’s more, they must wait two years after establishing a representative o ce before they can begin selling their products. Most companies use that time to do market research, establish a relationship with the government and nd a local partner—another requirement for foreign companies. Martha Temple, president of Aetna Global Bene ts, says the company will use the time to explore the market and determine its level of investment and product mix. “China is very di erent,” she says. “We want to make sure we understand what it is to do business there. We want to make sure we adapt our business appropriately for the country.” With the world’s largest population, an emerging middle class and a robust GDP, it’s easy to see China’s attraction. But tapping the market, experts say, presents formidable challenges. 8 OCTOBER 2008 China’s population, which represents 19.8% of the world population CIGNA was an early leader in China. The Philadelphia-based insurer established a representative o ce there in 1994 and began selling products in 2003. “In many ways it’s still a nascent market,” says Shirley Puccino, vice president of international health strategies and marketing for CIGNA International Health Bene ts. “The country clearly presents an opportunity, but there are barriers to entering the market. You need to make sure you’re in compliance, you need to identify the right partners and exercise creativity in designing new products.” And that’s just for starters. Language and cultural barriers, currency risks and regulatory inconsistency—regulations di er from one province and often one city to the next—add to the challenge. “The biggest single liability for companies doing business internationally is lack of patience,” says Bruce Pollack, president of the Academy for International Health Studies. “They’re worried about tomorrow’s stock price, and an investment in China has to have an investment horizon of 10 or 15 or 20 years.” CIGNA’s Chinese operations began turning a pro t last year. COMPETING FACTOR 1.3 billion Competition is a factor, too. Many Chinese banks are beginning to o er health products aimed at the individual market. Several large Chinese insurers, such as China Life Insurance, are expanding into other insurance arenas and large multinationals are entering the fray. Despite the in ux, Pollack doesn’t anticipate smaller U.S. insurers pack their bags and head for China. “I don’t think we’re going to see to many more companies enter the market than we’re seeing today,” he says. “The smaller companies lack the international experience and China is not a market where you want to cut your teeth.” MHE

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Managed Healthcare Executive - October 2008 For Your Benefit Editorial Advisors Contents News Analysis State Report Politics &�Policy Healthcare Reform Trends in 2009 Cost Control Strategies Predicted Premium Increase Top Challenges in 2009 IT System Integration Technology Innovation Disease Management Health Management Pharmacy Best Practices Technology Desktop Resource Ad/Edit Index Managed Care Outlook Statement of Ownership

Managed Healthcare Executive - October 2008

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