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Busy! Busy!
As most of you are
aware, Medipac offers our Early Bird
Travel Insurance in July and early
August at a 5% extra discount, in
addition to your Claims-Free and
Loyalty credits. It looks as if this year
will be another record-breaking year
for travel insurance sales, based on
your responses to date.
The past season was a difficult one
with large increases in hospital and
doctor bills primarily due, I believe,
to the uncertainty surrounding
Obamacare. To give you an example,
the average bill for ONE day in the
hospital increased from $12,985
during the 2010-11 travel season to
$14,577 during the 2011-12 travel
season. That represents an increase
of more than 12%. Doctor visits and
outpatient care increased at an even
faster pace – up by 17%. Needless to
say, our very modest rate increases
last year did not anticipate such
strong medical inflation.
But there was lots of good news,
too. Our relationships with
hospitals, clinics and doctor groups,
particularly in the United States,
grew stronger, and our expected
pricing points were very aggressive.
We also had excellent results from
our air ambulance teams, with one
exception being a very complicated
extraction from South Africa. The
extraction was executed with
precision and care and the medical
team did an incredible job, but
it did cost $130,000. Normal air
ambulances from the U.S. to Canada
routinely cost in the $10-20,000
range.
The really big uncertainty in pricing
for this year is, of course, the
U.S./Canada exchange rate. Most
insurance companies priced at about
the par mark for last year and some
were caught when the dollar actually
fell to the $0.96 range earlier this
year. Others hedged their U.S. dollar
exposure, back in September of last
year, and this worked out well for
them, although it is an additional
cost to their plans and puts upward
pressure on premium rates. But what
about this year? No one knows! And I
do mean no one.
Some pundits (that means banks,
brokerage houses, investment
houses, etc.) are calling for an $0.85
dollar next year. This means that
when we get a doctor’s bill for $100
U.S., we must pay $117.65 Canadian
to settle that bill. With a dollar at
par, we would only have to pay $100
Canadian. To put it in perspective,
that requires a 17% premium rate
increase, just based on the dollar.
Please remember the medical
inflation which we discussed above,
too. Others predict a $0.90 or $0.95
dollar and there are one or two that
are still saying par, but they are now
rare.
We should throw in the “shock”
factors now, so that we can get a
clearer picture; about as clear as
mud, mind you. The November
U.S. presidential election is won by
Romney/Obama – the U.S. dollar
rockets upwards/downwards and
the Canadian dollar exchange rate is
------. Please insert your best guess,
because that is all it can possibly be.
What about parts of Europe falling
apart, and that is very close to being
Insurance
The Flight of the