Navigating Regulatory and Compliance Requirements in the International Private Medical (iPMI) Market

This iPMI Global in Focus article examines the rising complexity of regulations and compliance within the international private medical insurance (IPMI) market.

Here are the top takeaways regarding regulation and compliance in the iPMI Market:

• Anti-Money Laundering (AML) and Know Your Customer (KYC) Regulations: Insurers are subject to AML and KYC regulations, which require them to verify the identities of their customers and monitor transactions for suspicious activity. These regulations are designed to prevent money laundering, terrorism financing, and other financial crimes. Complying with AML and KYC regulations can be complex and costly, especially when dealing with customers from different countries.

• Compulsory Insurance: A growing number of countries are mandating health insurance for citizens and expatriates. These mandates may involve state-approved schemes, private insurers, or a hybrid approach.

• Currency Controls and Exchange Rate Volatility: Many developing countries have currency controls in place, which are government-imposed restrictions on the flow of capital into and out of the country. These controls can make it difficult for insurers to collect premiums and pay claims in local currencies. In addition, exchange rate fluctuations can create challenges for insurers when converting currencies for premium payments and claims settlements.
• Data Privacy Regulations: Insurers collect and process large amounts of sensitive personal information, including medical and financial data. Cross-border data transfers are subject to stringent data privacy regulations, such as the General Data Protection Regulation (GDPR) in the European Union, the Health Insurance Portability and Accountability Act (HIPAA) in the United States, and the Personal Information Protection and Electronic Documents Act (PIPEDA) in Canada. Insurers must comply with these regulations when transferring data across borders to ensure the privacy and security of their customers' information.
• Licensing Requirements for Insurance and Financial Products: The sources explain that most countries have enacted laws to regulate the sale and solicitation of insurance and financial products to their citizens. This includes international private medical insurance (iPMI). As a result, iPMI providers need to obtain the appropriate licenses in each country where they operate, which can be a complex and time-consuming process, especially for insurers operating in multiple jurisdictions.

• Local Laws and Regulations: IPMI providers must navigate a complex web of local laws and regulations, which vary significantly from country to country. This is a departure from the past, where a single product could be offered globally.
• Local Partnerships: Some countries require foreign insurers to partner with local companies to operate within their borders. This can present challenges, but it also offers access to local markets and expertise.

• Sanctions Compliance: Insurers need to comply with international sanctions, which are economic and political restrictions imposed by governments or international bodies on specific countries, individuals, or entities. The sources note that the number of sanctioned countries, companies, and people have increased significantly in recent years, making sanctions compliance increasingly challenging, particularly for smaller insurers.

Impact on Insurers and Brokers

These regulatory complexities require insurers and brokers to have a deep understanding of the specific requirements in each country they operate in. They need to be aware of:

• Currency regulations: How premiums and claims are handled in different currencies.
• Tax laws: How IPMI products are taxed in each jurisdiction.
• Offshore Insurance Restrictions: Offering IPMI solely from offshore locations is becoming increasingly difficult due to compulsory insurance rules, stricter regulations, and a rise in nationalism.

Conclusion

This article emphasizes that managing regulatory compliance is crucial for insurers engaged in cross-border health insurance. Failure to comply with these regulations can result in significant fines, legal penalties, and reputational damage.