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ESSENTIAL READING FOR TRAVEL INSURANCE INDUSTRY PROFESSIONALS

International Travel Insurance Journal

Page 22 Page 32Page 24 Page 28

ISSUE 64 • MAY 2006

ITIJITIJ

ING Canada Inc. has acquired Grey Power InsuranceBrokers Inc. (GPIBI), one of Canada’s largestproviders of home, auto and snowbird travelinsurance products. GPIBI, headquartered inStouffville, Ontario, is reported by ING to have

approximately $US58 million in annual premiums, fivesatellite offices in Ontario, and about 100 employees.Milan Korcok reports

The ING/GPIBI deal follows in the wake of American

International Group’s recently announced acquisition ofTravel Guard International, one of the largest providersof travel insurance products in the US. GPIBI is thelargest player in the greater Grey Power network, aloose affiliation of insurance brokers in Alberta, Ontario

and Nova Scotia, which specialises in property, casualtyand travel insurance products for Canadians over 50.According to ING, GPIBI accounts for about 50 percent of Grey Power’s total business volume. GreyPower products are underwritten by the TrafalgarInsurance Company of Canada, which ING acquired in2004 as part of its acquisition of Allianz Canada.

ING Canada acquires Grey Power Brokers

Separated families urged to take coverIn today’s western social climate,where there is an increasingnumber of families comprised ofseparated or divorced couples,those planning a holiday arebeing warned to check theirtravel insurance small print.Sarah Lee reports

A recent report by researchcompany Defaqto found that thedevil really is in the detail whenuncovering whether your family isfully covered. The study, whichexamined 400 travel policydocuments, discovered that theterm ‘family’ varies betweeninsurers, and that in some cases thedefinition excludes children that donot ‘normally live with’ the parentwith whom they are travelling.The problem particularly ariseswith annual policies, which areoften bought to provide cover fora family, including thepolicyholder, their spouse orpartner and their children. Incases where a child or childrenare travelling with the parent withwhom they do not usually live,problems can arise.In the same vein, issues candevelop over the definition of ‘close family’ in travelpolicies. With one of the major claim areas in travelinsurance being cancellation – often due to illness orthe death of one of the travellers or a member oftheir ‘close’ family – just what constitutes ‘close’should also be checked with your travel insurer,concluded the report. Although some insurers include aunts, uncles,

nephews and nieces in this group, others onlyinclude parents, grandparents, children andgrandchildren. Insurers who widen the scope ofinclusion should also bear in mind that, whilepotentially offering greater cover for problems suchas cancellation, any medical problems of ‘close’family members that may ultimately affect a client’stravel plans need to be declared at the time of

purchasing the policy, which rarely happens,according to Defaqto. American Express Travel Insurance, whichcommissioned the research, has warned that it isimperative for families to ensure that their specificcircumstances are accounted for in their travelpolicy. Any concerns should be raised with thecustomer’s insurer to clarify such details.

Oz code helps travelinsurance customersTravellers in Australia will be offered a new dealfor travel insurance in July, with the release of anew General Insurance Code of Practice. TheInsurance Council of Australia (ICA) says it willensure higher, measurable performance standardsfor dealing with general insurance customers. BySarah Lee

The code will, importantly, set industry standards toprotect travel policyholders if they make a claim,including the settling of claims in specific timeperiods and providing clearer information aboutpolicies. “The new code has received strongsupport from government, as well as consumer andbusiness groups,” said Philip Maguire, ICA deputychief executive. “The code means insurers will meetagreed timeframes for handling claims or respondingto complaints, generally within 10 days.”Reportedly, insurers can also fast-track claims ormake advance payments when customers showthey are in financial hardship as a result of thedamage or loss leading to their claim. “The codeenshrines a commitment to a better deal forcustomers across all types of general insurance notcurrently covered by specific statute,” explainedMaguire. “With more than 41 million insurancepolicies in force and $55 million in claims paid eachbusiness day in Australia, the improved servicestandards the code promotes will have a genuineimpact on travellers.”He went on to explain that the code is written inplain language to ensure ease of understanding andnot only sets concrete standards that customers willbe able to expect of their insurer, but encouragesinsurers to exceed them. It has been created aftermore than a year of extensive consultations with theConsumers’ Federation of Australia, the AustralianChamber of Commerce and Industry, the InsuranceOmbudsman Service and other groups. All ICA members, who represent around 90 percontinued on p.4

continued on p.2

Travellers urged todeclare a condition

Fifteen per cent of medical emergency claims aredeclined because they relate to a pre-existingmedical condition that isn’t covered by standardtravel policies, according to new research fromEurop Assistance (EA). The company is urgingtravellers to declare medical conditions at the timeof purchasing insurance and, if necessary, to take outa top-up policy to cover them if the standard policyfalls short of their requirements.The UK medical assistance and travel insuranceprovider is also advising travel agents and touroperators to protect their customers byencouraging them to give honest, full answers toany medical questions an insurer may need to ask.“People worry that if they declare their condition toan insurer they won’t be given even standard cover,or will have a high insurance premium to pay,” saidCharles Walckenaer, Europ Assistance managingdirector for the UK and Ireland. “So, they either failto declare, declare but refuse to pay for a top-uppolicy to ensure the appropriate extended cover fortheir condition, or simply don’t take out insurance atall. The message the travel and insurance industriesneed to get across is that it’s a gamble not worthtaking.”Citing the example of a £400,000 US hospital billthe company is currently settling for a client thatsuffered a heart attack and subsequentcomplications, Walckenaer is keen to counter thecommon, yet wrongly-held belief that sufferers ofserious conditions won’t be able to find an insurerto offer them even basic travel cover. Standardpolicies are always available and cover for anythingnot associated with the pre-existing condition.Medical screening, he said, is there to protect thecustomer; it is better to pay a premium to reflect anindividual risk, rather than have to deal with thefinancial, practical and emotional implications aloneshould something go wrong abroad.

WHAT’S INTHIS ISSUE?

REGULARSNews 1Grapevine 7Insurance matters 8Health matters 13Editorial comment 14Travel matters 16Company brief 18Air ambulance news 19News analysis: Only giants need apply 22World markets: Latvia and Lithuania 24Hot spots: Mexico 27Dick’s hotline: Travel hassles 27Service directory 34Diary dates 39On the move 39Contributors 39

FEATURES

Why does screening happen? 28Insurance and the DDA 30

ITIJ TEAM

Editor-in-chief: Ian CameronEditor: Sarah Lee

Sub-editor: Chris Marke

Staff writer: Hannah Langfield

Designers: Eli ButlerChris Marke

US correspondent: Milan Korcok

India correspondent: Saby Ganguly

Legal correspondent: Dick Atkins

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ITIJITIJInternational Travel Insurance Journal

Fresh horror strikesEgyptian resortTragedy has struck again in Egypt as up to 30 peoplewere killed in the popular resort of Dahab. It wasthe third in a series of bombing incidents on Egypt’sRed Sea resort of Sharm el Sheikh.Dahab is a quiet market town and a popular touristresort, especially for young Westerners attracted byits scuba diving and cheap hotels. The attackconsisted of three rapidexplosions – at a supermarket,a restaurant frequented bytourists and a hotel – all nearthe town centre. In total 160were injured in the explosions,which occurred at 7.15pm on24 April. The bombs rocked the townduring Dahab’s tourist highseason, while locals were alsocelebrating the spring holidayof Sham el Nessim. Manytourists on spring break visitDahab, mostly from Europe orIsrael, but there were also a lotof Russians present celebrating their OrthodoxEaster. An ambulance official said that many of thedead were foreigners. No one has yet claimed responsibility for the attack,which came a day after Al-Quaeda leader OsamaBin Laden released a tape claiming the West iswaging war with Islam. The blasts are also hot onthe heels of the arrest of 22 people in Cairo theprevious week. A group allegedly calling itself the‘Victorious Group’ are said to have downloadedinformation on bomb-making from the Internet andlaid plans to attack tourists and religious leaders.Local security services were treating the explosionsas terrorist attacks, preventing people from leavingthe town, while stepping up security in otherresorts.Despite suffering heavily in the 1990s, Egypt’stourism industry has proved remarkably resilient,especially with regards to the most recent attacks,and it enjoyed a boom of about eight million visitorslast year.

NEWS2

International Travel Insurance Journal www.itij.co.uk

Profits rise as Indiansget the travel bugWith more and more Indians now willing to spendmore of their growing disposable income on

travelling abroad, the travelinsurance industry in thecountry is eyeing a jump inearnings. According to oneindustry estimate, businessis expected to grow toRs2.6 billion by March2007 from the currentRs2.0 billion.Around Rs6.0 billion is spentannually by the Indian publicon trips abroad – whetherfor business or pleasure. Of

the estimated six million travellers, 55 per cent arecorporate travellers, 25 per cent travel for leisurepurposes, 10 per cent travel to visit friends and family,and the remaining 10 per cent is made up of studentsand other travelling groups. The fast-growing businesstravel sector, however, is the one most travel insurersare keeping a keen eye on.

South Africa sortsits postSouth African Post Office CEO Khutso Mampeulestated recently that the country’s ‘hopelessly loss-making [postal] organisation’ is to undergo a majorrevamp over the next five years to remain relevantin the age of electronic communication. This couldvery well mean a new way of distributing travelinsurance to the country’s 44 million inhabitants.Faced with dwindling volumes of mail, largely due tothe advancement of the Internet, the government-backed Post Office says it has been left with nochoice but to embrace technology. Mampeule saysit will, therefore, spend around R500 million thisyear to roll out the initial information andtechnology infrastructure needed to service thoselocations that do not already have it. The plan is to ensure that all Post Office outletshave access to the Internet, telephones, printers,photocopiers and fax facilities. Some outlets will alsohave cash machines, where people can withdrawmoney and pay their bills. It will, likewise, providefacilities to renew drivers’ licenses, register vehicles,and pay traffic fines. “The aggressive growth ingovernment services provision could potentiallyincrease our operating profit by R50 million,” saidMampeule.The company is also in discussions with the homeaffairs and health departments for the distribution ofpassports, work permits, birth and death certificatesand some medicines. Most worldwide post officesalready offer such services and more, includingforeign currency exchange, travel insurance and anonline sales capacity, and it is surely only a matter oftime before South Africa does the same.

Lost baggage needsprotectionAccording to SITA, a global IT provider for airlinebaggage handling, the problem of mishandledbaggage is worsening around the world due toairport congestion, tight turnaround times, securityregulations and mounting passenger and baggagevolumes. With this in mind, many insurers areurging travellers to make sure they have sufficient

insurance before settingout on vacation.SITA claims 30 millionbags will be mishandledat worldwide airportsthis year, which meansthose with the rightinsurance for lost,damaged or delayedluggage could bereimbursed for millionsof dollars. However,travellers need to makesure they haveadequate cover and thecorrect paperwork, as

insurance plans have limitations of coverage andrequire documentation, such as receipts, airlineclaim reports, police reports and other proofs ofloss, explained Beth Godlin, executive vicepresident of Access America. “Crowds, severeweather and tight connections affect the entiretravel experience, so it’s better to be safe thansorry,” she said.A past survey by Legal & General Travel Insurancein the UK also found that 52 per cent ofrespondents undervalued their luggage and 23 percent had no idea of the value of their possessions.“[Holidaymakers] should check their cover beforetravelling and keep the details in their hand luggage,”commented Garry Skelton, the company’s generalinsurance marketing manager.Legal & General reported recently that 200,000bags are also reported lost or stolen each year, sotravellers need to be made aware of the importanceof baggage cover. The US Travel InsuranceAssociation reports that approximately only 30 percent of US leisure travellers buy travel protection,so there is clearly a large majority that still need tolearn the importance of having some cover ratherthan none. With regards to baggage, though,despite some travellers being covered by theirhome contents insurance for lost or damaged items,this doesn’t always provide the protection neededwhen travelling out of their home country.

ING Canada acquiresGrey Power Brokers

continued from p.1Ron Griffiths, president of GPIBI will continue as itspresident, and the management team and staff willremain unchanged. “The transaction is not expectedto have any immediate impact on the staff oroperations of GPIBI,” said Griffiths. “We’re verypleased with this transaction. Weexpect both clients and staff to derivebenefits through this directassociation with ING Canada, whichhas clearly established itself as aleader in our industry.”The deal clearly gives ING, a rapidlyexpanding multinational financialservices company in North America,a major presence in Canada’sburgeoning ‘baby boomers’ market.Trafalgar Insurance vice presidentCatherine Smola said of theacquisition: “GPIBI will be well positioned to capitaliseon ING Canada’s strengths, such as exceptionalunderwriting and claims management, as well asmarketing, actuarial and IT support.”ING Canada is the largest provider of property andcasualty insurance in Canada and now owns four ofthe eight Grey Power brokerages in Canada.


ADVERTORIAL4

With its Patient Transport Compartment (PTC),Deutsche Lufthansa offers a solution for thetransport and intensive medical care of critically-ill patients on long-haul flights that hasbeen systematically developed and perfectedsince 1996.

The PTC is a closed space unit specially developedfor this purpose. As a result, the private sphere ispreserved and consistent intensive medical care ofthe patient made possible.As an independent fully-functional space unit, whenrequired the PTC can be installed in wide-bodiedaircraft like the B 747-400 and the A 340 fleetduring routine time spent on the ground inFrankfurt. Measuring 6 square metres and withnormal standing height, in comparison to anambulance aircraft, the PTC offers plenty of spacefor the treatment of patients.In addition to the patient bed, the compartmentcontains two seats for the medical crew, intensivecare equipment, 13,000 litres of oxygen and therequired consumable materials and drugs.LogisticsSince spring 2004, the PTC has been flying notonly to the B 747 destinations, but also on allintercontinental flights that are flown by the new A-340-300/600 fleet . Thus the number ofdestinations that can be reached directly with thePTC system has increased from 25 to more than

60 worldwide.In the event of an inquiry for the PTC system,approx. 30 minutes time is required for checkingthe system, in order to provide an approval. ThePTC transport is handled on the basis of a prioritysystem, irrespective of the capacity utilization of theflight. In order to guarantee smooth repatriation,the chronological course of the flight is discussed inadvance together with the customer. This includestransport to and from the airport. Here, preciseplanning is very important as the planned flightroutine of a schedule flight should not be affectedby a PTC tour.After the commissioning of the transport order andthe immediate operative preparation, on day 1, asa rule, the medical crew sets off from Frankfurt totravel to the patient. It is made up of the doctorprovided by the customer and the LH PTC Escort.The PTC Escort is a male or female flight attendantwith training as an intensive care nurse/paramedic.In addition to providing medical assistance, he/sheis responsible for the safety and coordination of thePTC Transport. Thus, the doctor has anexperienced assistant by his side, enabling him to

concentrateexclusively on themedical care of thepatient.On arrival at thedestination thereare usually at least24 hours beforethe return flight.The doctor takes alook at the patient’sdocuments andexamines thepatient in order toassess his/hertransportability. Allthe otherpreparatory work iscompleted duringthis time.If the patient is notfit for transportationat this time, there isstill time to stop the installation of the PTC inFrankfurt. It is thus possible to avoid the main costelement in the event of a cancellation or atemporal delay without the PTC being used. In thiscase, together with the customer, LH will discusswhat alternatives are then realizable. That couldmean: later use of the PTC or the return of the

medical crewwithout thepatient. In order toguarantee thatthe flight withthe PTC isconducted ontime and allwaiting timefor the patientis avoided, theflight can beregistered witha high prioritywith theCentral FlowManagementUnit (CMU) inBrussels.

Thanks to the well-coordinated logistics it isguaranteed that the patient can be brought onboard without problems and a reciprocalimpairment of passenger and medical transportdoes not occur. In the normal case, the patient isback home about two and a half days after themedical crew departs on its mission.The transfer at all airports is conducted, onprinciple, by Lufthansa. In Frankfurt a specialambulance highloader is available. At other stationsuse is made of a catering vehicle. This is safer andsimpler than bringing the patient aboard via theaircraft’s steps. If the patient is to be furthertransported by rescue helicopter or ambulanceaircraft, provisions can be made in advance for theLH aircraft and the other aircraft to be positionedimmediately next to each other. This ensures animmediate transfer of the patient.The total transport time must be kept to theabsolutely necessary minimum. The PTC systemfulfils this precondition, it facilitates a shortening ofthe transport time by up to 50%. Another important factor is the price of theintensive care transport. Included in the PTC price

is a B-Class ticket for the accompanying doctorfrom or to the patient, the medical equipment inaccordance with the requirements for intensivecare transport, drugs as well as medicalconsumable materials plus the PTC Escort.The price comparison is clearly in favour of thescheduled flight. The difference compared to anambulance flight is so substantial that the differencenot only covers the feeder and collection flightsbut, in addition, also produces a clear costadvantage for the scheduled flight. With cleareconomic, operative and medical advantages onlong-haul routes, the PTC is less a competingproduct, but rather a meaningful alternative to theambulance aircraft with a very specific performanceprofile.

Medical team and equipmentWhile the customer, as a rule, provides theaccompanying doctor for the transport, LHprovides the assisting medical personnel (intensivecare nurse/paramedic). The PTC Escort instructsthe doctor if necessary in the use of the medical

equipment, he is in possession of all the necessarylicenses required by the Federal Aviation Agency,and he assumes before and during transport allorganizational and safety-relevant responsibilities.This leads to a significant relief of the doctor, hecan concentrate fully on the medical treatment ofhis patient and is thereby integrated in the LH-internal flight procedure by the assistant. Thedoctor, as a rule, is a specialist and has bothintensive care and emergency medical experience.With Lufthansa’s Patient Transport Compartment aclosed intensive care unit is available for civilaviation which can be used on scheduled services.In 6 square metres, this unit offers a treatmentroom with standing room.The medical equipment includes intensive careequipment which offers a high degree of patientsafety. If necessary, further equipment can betransported. Due to the clearly shorter flying times and lower costs in comparison to theambulance jets, this system is an ideal alternativefor patients requiring intensive care, particularly onlong-haul flights.

Larger, safer and more beneficialThe PTC of Lufthansa sets new standards

Advertorialwww.lufthansa.com

www.itij.co.uk International Travel Insurance Journal

NEWS 5

One Egyptian was killedand 35 other people,including 28 Germantourists, were injured on21 March when a touristboat hit a bridge inSouthern Egypt. Thevessel, called the KingTut, which carried 68German tourists, was onits way from Luxor toDendera when the accident happened.The upper part of the ship smashed into the bridgeas it attempted to sail under and one crewman waskilled instantly, while 35 other people, who were onthe sundeck, sustained minor injuries.

Death on the NileEU bans 92 airlines for safety breachesA blacklist of airlines has been set up by the EuropeanUnion (EU), banning them from landing at Europeanairports. Pressure has been building for a single listsince last year’s fatal crashes in Greece and Italy, andthe crash of Egypt’s Flash Airlines in the Red Sea inJanuary 2004, which killed 148 people.The ban applies to cargo and passenger carriers judgedto have an ‘inadequate system for regulatory oversight’and will be enforced by all 25 EU nations, plusNorway and Switzerland. The 92 are mostly in Africaincluding Congo, Equatorial Guinea, Sierra Leone,Swaziland and Liberia.EU Transport Commissioner Jacques Barrot said theEU was barring 50 carriers from Congo alone, 14from Sierra Leone and seven from Swaziland. This willensure that all airlines operating from those countries

are prevented from flying to Europe. He went on todescribe some of the aircraft from these countries as‘flying coffins’.The list, which was published on the EuropeanAviation Safety Agency website on 22 March, must bebrought to the attention of customers by travel agents,both at ticket sales offices and on their websites. Touroperators will also have an obligation to informpassengers on the identity of their carrier.Under the new rules, passengers will also have a rightto compensation if their airline was included on the listor replaced by another banned airline after theybought the ticket. The list is to be reviewed everythree months with the EU’s aviation safety agency andthe EU is to provide aid to African nations trying toupgrade airline safety standards.

World issues Nepalsafety warnings

Government offices around the world have issuedtravel advisories warning against visits to Nepal at thistime. With the ongoing nationwide violent armedinsurgency against the Nepalese government by theCommunist Party of Nepal (Maoist), street clashesoccur regularly, including in popular trekking andtourist areas. The Australian government’s travel advice tells howMaoists have targeted vehicles, including busses, andthat indiscriminate bomb attacks have injured foreignvisitors. It also details the curfews imposed byNepalese authorities, and the suspension of mobilephone services.The curfews, explains the US Embassy, are tocontrol the growing number of large andwidespread demonstrations taking place in thecountry as a result of the general political strike. TheUS Department of State is concerned by the threatto the personal safety of travellers to the country,especially given the increasingly violentdemonstrations, which look set to continue, andnew ‘shoot to kill’ orders for curfew violators. Meanwhile, the UK’s Foreign Office has also statedthat people planning to visit Nepal should decidewhether their presence in the country is essential.While the political situation in the country remainstense and unstable, those foreign visitors already thereshould respect the curfews and stay indoors whenrequested to. Those travelling to the area, it says,should ensure they have comprehensive travel andmedical insurance, and check for any exclusions.

Reminder for thosewho still overpayMany travellers still take out travel cover each timethey go away instead of considering an annual policy.In a bid to remind customers of the money theycould save if they did take the time to shop for suchpolicies, British direct insurer More Th>n is lettingtravellers know just how much extra they could havein their pocket if they purchased travel insurancewisely.Although the British travelling public takes over 60million trips abroad each year, almost three-quartersof all standard travel insurance policies sold are still forsingle trips. With annual cover not costing much morethan the price of just two short trips within Europe,the company is advising travellers that annual covercould very well be the way forward for those planningmore than two trips abroad in a year.The lure of the annual policy has never been greater,with increasing numbers of holidaymakers takingincreasing numbers of trips. Cut-price airfares coupledwith cheap deals on everything from hotels torestaurants saw 2004 witness an increase of 4.4 percent in the number of trips taken abroad. Longweekends are especially popular, along with anincrease in luxury and boutique holidays. With somany cheaper deals, the ideal holiday is moreaffordable than ever.That is as good a reason as any to make suretravellers have adequate insurance for their trip,especially with an increasing number of peoplebooking their travel details on a ‘DIY’ basis: airfares,hotels, and insurance are all increasingly being bookedseparately. Still, however, nearly half of all policiestaken out by British travellers are bought from touroperators and travel agents, at a cost of over £330million each year, when it might just pay for them toshop around, says More Th>n.


NEWS6

The parents of a 15-year-old Irish girl who felloverboard from a cruise ship while drunk haveasked the US Congress and the international cruiseindustry to crack down on underage drinking onthe high seas. Milan Korcok reports

Referring to the loss of their daughter Lynsey whilesailing on the Costa Magica, off the coast of Mexicolast January, Paul and Sandra O’Brien of Dublin, said:“Children are a precious gift and it’s up to us as adultsto protect our children. There is nothing to stop thishappening again.”The mishap occurred after Lynsey had been servednumerous drinks at a bar, while her parents werehaving dinner. Bar receipts showed Lynsey hadordered at least 10 alcoholic drinks. The last of thereceipts showed her signature to be virtually indistinct.A middle-aged barman, who had been seen servingand conversing with her during the evening, has sincebeen fired. Witnesses to a US congressionalcommittee investigating recent cruise ship passengersdisappearances and crimes, say they saw Lynseyvomiting over the balcony of the ship before herdisappearance. Mexican navy vessels assisted in thesearch for Lynsey for several days after the incident,but to no avail.Costa Cruise Lines, which is owned by CarnivalCruises, declined to comment on the incident, althoughLawrence Kaye, a Los Angeles attorney representingthe cruise industry to the congressional committeehearing, insisted that cruising was an extremely safeholiday and that, given the number of cruises takenannually (approximately 10 million), ‘statically, there arevery few victims (of crime or accidents)’.US legislators were less sanguine, but theycomplained that their ability to track or investigatemisadventure on the high seas was restricted becausemost ships were flagged abroad and sailed outside USterritorial waters. Despite this restriction, USrepresentative Christopher Shays, chairman of thesubcommittee on National Security, said he wasdrafting legislation to make cruise lines moreaccountable for crimes and misadventure that occur ininternational waters.

Underage drinkingadds to cruise woes

Oz code helps travelinsurance customers

continued from p.1cent of the market, will adopt the code by 18 July,and other general insurers will be encouraged to doso as well. Before its implementation, however, theICA is encouraging holidaymakers to chooseinternationally recognised travel policies, be wary ofexclusions, declare pre-existing conditions beforetravelling and be knowledgeable about what theirpolicy covers.

Vietnam slashes insurance costs to lure foreign visitorsVietnam’s largest insurer is slashing the cost of itstravel insurance in an attempt to lure foreigncustomers. Bao Viet isoffering travel policiesto international touristsat a much lower rate toboost business,according to acompanyrepresentative.Clients will reportedlybe able to paypremiums equivalent toa 40 to 50 per centdiscount on thoseprices paid by a Vietnamese person wanting cover

for their trip abroad. Visitors aged 75 or undervisiting Vietnam for up to six months, as well as

expatriates, are thetarget market, saidthe company.Bao Viet plans tooffer several primaryinsurance products,covering costs forhealth services,emergencytransportation withinthe country, as wellas repatriation ofremains and

cremation in Vietnam. It explained that the insurance

would come into effect when the foreign visitor hadcompleted entrance procedures for the country, andwould expire once exit procedures had beencompleted, or after 180 days. However, the servicecan be extended if visitors continue to travel in otherAsian countries after Vietnam.As most travellers buy their insurance in their homecountry, rather that their destination country, this isa bold push indeed. Citing the possibility ofenforcing compulsory travel insurance on visitors toVietnam as a way to further boost the travelinsurance industry in Vietnam, a companyrepresentative said that it hopes the new strategyfor attracting foreign insurance buyers will improvethe level of foreign purchases above its currentthree per cent of the market.


NEWS 7

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Sunscreen lawsuitA law firm in LosAngeles has filed a suitaccusing sunscreenmakers ofexaggerating howwell their productsprotect against thesun’s harmfulultraviolet rays. Thelaw suit claimssunscreens do notblock all UVA raysthat can cause cancer,and it is seekingconsumer refunds. Italso wants to forcethe manufacturers togive up earnings fromthe sales of such products.“Sunscreen is the snake oil of the 21st century,”said Samuel Rudman, a partner in Learch CoughlinStoia Geller Rudman & Robbins, which filed thelaw suit. “False claims such as ‘sunblock’,‘waterproof’, and ‘all-day protection’ should beremoved from these products immediately. Morethan $455 million worth of sunscreen and tanninglotions are sold each year.

Cover required for terror attacks abroadDespite the UK Chancellor Gordon Brownunveiling a £1-million charitable fund for victims ofterrorist attacks abroad in his March Budget,travellers are increasingly concerned about thecover their travel insurance provides. Some insurersare taking advantage of a gap in the market to offeradditional cover, but all the while the government isbeing called upon to do more.In an Observer report at the beginning of April, the‘perceived inadequacy’ ofBrown’s ‘initialendowment’ to the fundfor the victims of terrorismwas highlighted. It statedthat although the new fundprovides assistance forvictims both at home andabroad, campaigners suchas Trevor Lakin and TobiasElwood, who have bothlost family in separatebombings abroad (see ITIJ60, January 2006, Taxingterror), are complaining that the money is notenough and that the proposals are lacking in detail. The UK government’s original criminal injuriesscheme is limited to offering compensation tovictims of attacks on UK soil, but although “over £50million was rightly given to those affected by the 7July bombings … not one penny is available to anyBriton caught up in a terrorist incident abroad,” saidElwood, who flew out to Bali to identify andrepatriate his brother after bombings in the countryclaimed his life. Brown’s new fund should begin tomeet this need, however, and will begin to provideassistance for victims of terror overseas.Not wanting to take the issue of protection solelyinto its own hands, the government’s ForeignSecretary Jack Straw launched a guide for travellerson the day before the Budget was announced, inwhich he spelt out the limits of the Foreign andCommonwealth Office’s role. “People need to beclear what we cannot do,” he told the House ofCommons. “We cannot get people out of jail; norcan we pay their hospital bills.” Fair point, you mightsay, as this is where travel insurance comes in.However, many travellers are still unaware thatmost policies contain exclusions for acts of terror. Travel insurers are being slow remove theseexclusions, but the latest to do so is WorldAssure,

which has developed a new policy, underwritten byLloyd’s of London, that covers repatriation andground handling costs for victims of terror and theirfamilies. Although it also aims to help travellersaffected by natural disasters when abroad, thosewith previously undeclared pre-existing conditionsand people taking part in but not covered fordangerous sports, the thing that really makes itdifferent is that it is being marketed directly to the

travel industry, namelytour operators andairlines. The idea is thatthe policy will cost ‘pencerather than pounds’ andwill be included in theprice of a ticket. According to DerekMoore, Association ofIndependent TourOperators member, it is an‘interesting idea, especiallyfor people whose existingpolicy does not cover the

situation’, but he warns travellers not toautomatically assume that their policy does notcover for such things. The policy his travel companyuses has no exclusions except for ‘nuclear, chemicaland biological terrorism’.Meanwhile, WorldAssure managing director, JamesKindleysides, points out that some 5,000 Britishtravellers die abroad every year, many with nocover. “Most people don’t give it a second thought,but those who do assume that their travelinsurance will cover the cost of an accident, injuryor death while overseas. But in the case of death,it just isn’t true,” he says. Kindleysides believes thetravel industry has a duty of care to incorporatesuch an indemnity into all travel arrangements andthat industry-wide take-up would mean costswould be ‘miniscule’.The absence of provision for travellers who dieabroad featured prominently in the mass medialast year, when terrorist atrocities overseas sawBritish and other families not covered by theirtravel insurance policies, and receiving little or nohelp from governments. Campaigners willcontinue to call on lawmakers to create anadequate fund for those injured abroad, and, asElwood stated, they will remind insurers not torely on terrorist exclusions.

Oops: wrong airportA Ryanair flight from Liverpool to Londonderry inthe UK recently ended up landing at a militaryairfield five miles away. A statement from theairline said: “This incident arose as a result of anerror by the Eirjet (operator of the flight on behalfof Ryanair) pilot, who mistakenly believed he wason a visual approach to City of Derry airport.”

Laughing matterEnglish-speakingvisitors to Beijinghave longenjoyed the city’sentertaininglyerratic bilingualsigns. In theFobidden City,such messages as‘Don’t Fall Down’and ‘Being UrgentCall 110 Quickly’have been thesource of muchamusement. Butnow themunicipalgovernment is

taking steps to tighten the reigns on suchtranslations and improve its image as a modernand cosmopolitan city in time for the 2008Olympics. A languages office is preparing newsignposts, which are expected to be in place bythe end of 2007.

S&P launches ratings in JapanStandard and Poor’s ratings agency has announcedthe launch of Japan SME Ratings, a new ratingsservice for small and medium sized enterprises(SMEs). The first ever Japanese national credit ratingservice, this newsystem aims toenhance thetransparency ofJapanese SMEs and todiversify their financingopportunities.Japan SME Ratings,which has beendeveloped jointly withthe Risk Data Bank ofJapan, will be assignedto Japanese unlistedcompanies with annualsales of between JPY1billion and JPY10billion, based on arating methodologythat differs significantlyfrom Standard andPoor’s traditional ratingsystem. Japaneseratings will beexpressed using ratingsymbols from ‘aaa’ to‘ccc’, rather than thetraditional capital letters. If the traditional scale wasused to rate SMEs, most of the ratings would likely

fall in a lower range, making it difficult to elaborateon the differences in credit quality amongcompanies.Combining a newly developed assessment model

with Standard andPoor’s proprietaryCredit Risk Tracker tool,company assessmentswill take into accountnot only point-in-timeprobability of default,but also the volatility ofa company’screditworthiness.“We believe thisinitiative should helpimprove the businessefficiency of SMEs, raisebrand recognition andattract talent, motivatemanagement toimprove operations,and expand theircustomer bases,” statedYu-Tsung Chang,Standard and Poor’smanaging director andregional manager forJapan and Korea. It willalso help financial

institutions, serving as a common benchmark incredit analysis and lending decisions.

American International Group Inc. (AIG)disappointed investors in March, with fourth

quarter earnings that had fallen 72 per cent,affected predominantly by a large legal settlementand hurricane losses. Adjusted net income fell to$376 million or 14 cents a share compared with$1.73 billion or 66 cents a share a year ago.

Italian insurer Assicurazioni Generali SpA posteda 15 per cent rise in 2005 net profit, helped by

cost cuts and growth in key markets. Generali,which in March unveiled a multibillion-dollar planto restructure its balance sheet and boost growth,said net profit rose to €1.92 billion from €1.67billion in 2004.

Arecent Standard and Poor’s report has foundthat the insurance industry is turning more

frequently to catastrophe bonds. Now nearingtheir first decade of existence, these bonds are anincreasingly attractive alternative to reinsuranceas a means of managing risk exposure, especiallysince last year’s hurricanes.

Risk Management Solutions Inc. has updated itscatastrophe models to reflect higher insured

losses that are expected from increased hurricaneactivity, which the modelling firm says shouldcontinue for at least the next five years. Themodels project that annualised insurance losseswill rise by an average of 40 per cent across theGulf Coast, Florida and the southeastern US,compared to losses previously calculated usinglonger-term historical averages.

Hannover Re Group reported net income of€49.3 million for 2005, an 82.4 per cent

decline. The results reflected more than €1billion in natural catastrophe losses last year,compared to €287.2 million in losses in 2004.That led to a 112.8 per cent combined ratio inits property/casualty reinsurance segment forthe year. Gross written premiums increased 12per cent for property/casualty reinsurance to€4.72 billion.

Standard and Poor’s Ratings Services haslowered its counterparty credit and insurer

financial strength ratings on Royal & SunAllianceInsurance Group plc’s US insurance operations toBB from BB+. The outlook remains negative.

French reinsurer SCOR S.A. posted net incomeof €131 million for 2005 – a 75 per cent

increase over 2004. This was due in large part toa 33 per cent increase in investment income to€460 million for the year. Gross written premiumsin 2005 were down six per cent to €2.4 billion.

The UK’s Wellington Underwriting plc posted apretax loss of £26.2 million for 2005,

compared to a profit of £77.2 million the previousyear. Again, the hurricanes were cited as a reasonfor the company’s £140 million loss. Gross writtenpremiums were up by 17 per cent to £523.4million in 2005.

NEWSWIRE


INSURANCEMATTERS8

Major segments of the American insuranceindustry have renewed their call for a federalgovernment role in the establishment of apermanent, long-term solution to managingterrorism risk. By Milan Korcok

Testifying before an industry terrorism insuranceworking group, Robert Detlefsen, public policydirector for the National Association of MutualInsurance Companies (NAMIC), dismissed thewidespread notion that insurance markets bythemselves are capable of absorbing terrorismlosses, and he criticised insurers for not creating acomprehensive plan to generate terrorism capacity.A fundamental precept of the federal TerrorismRisk Insurance Act (TRIA) was that as atemporary measure it would stimulate theinsurance market to develop terrorism riskcapacity. Though an extension to TRIA wasapproved by Congress last year, the Act itself isdue to end on 31 December 2007.Also testifying before the National Association ofInsurance Commissioners public hearing onterrorism issues in March, Sharon Emek,representing the Independent Insurance Agents &Brokers of America (the Big ‘1’), said: “A privatepublic partnership, in some form, remains essential

to facing this challenge. Although some solutionsmight allow for the reduction or even eliminationof federal involvement in the years to come, it willcertainly be impossible to eliminate such a role inthe immediate future.”To date the Bush Administration, which enactedTRIA in 2002, has argued that the federal role ofproviding reinsurance, or a backstop, to insurers incase of catastrophic terrorism events wastemporary, and the industry would ultimately haveto assume the risk by itself.Emek noted that in the absence of a federalbackstop such as TRIA, terrorism insurance mightbecome virtually unobtainable for small andmedium sized businesses, a situation that couldhave devastating effects on the nation’s economy.NAMIC’s Detlefsen also noted that the lack ofcompetition among reinsurers to aggressively seekopportunities to write terrorism insurancecoverage as TRIA was nearing its initial theexpiration date in 2005 (it was extended byCongress to 2007) was a ‘market driven decision’.He added: “Because there are limits to the amountof loss exposure that even very large insurers canabsorb, no one should assume that large carrierswould fill the void created by the smallercompanies’ exit.”

US insurers call for terrorism strategy

Revealing just how costly successful terroristattacks could be if launched in major cities, theAmerican Academy of Actuaries (AAA) disclosedthat a major terrorist attack could result in $778billion in insured losses in New York City, $197billion in Washington, D.C., and $171 billion in SanFrancisco. By Milan Korcok

The estimates, presented to the terrorism issuespublic hearing of the National Association ofInsurance Commissioners (NAIC) in March, weredeveloped by a special AAA subgroup using themost up-to-date modelling technologies. Theestimates encompassed potential insured lossesfrom a conventional truck bomb attack, as well asfrom medium and large chemical, nuclear, biologicalor radiological (CNBR) events.Michael McCarter, chairperson of the subgroup, toldthe hearing: “The largest CNBR event we modelledcaused $696 billion in property and casualty lossesand $82 billion in group life insurance losses (inNew York).” He noted also that a truck bomb attackin the same city could cost $11.8 billion and amedium CNBR attack could cost $446.5 billion. According to the models, said McCarter, a largeCNBR in Washington, D.C. could cost $196.8billion; a medium CNBR event could cost $106.2billion and a truck bomb could cost $5.5 billion.McCarter told the NAIC hearing that much of theproperty and casualty insurance market could befinancially incapacitated in the event of a largeterrorist attack: “Our largest modelled CNBR loss ismore than two-thirds higher than the entireproperty and casualty insurance industry surplus. Inthe absence of TRIA or some other nationalframework for dealing with terrorism insurancelosses, many commercial lines insurers would bedevastated.”The Academy is currently preparing acomprehensive report for the President’s WorkingGroup on Financial Markets, dealing with the longterm availability and affordability of terrorisminsurance. The report is due in Congress by 30September 2006.

Terrorism lossescould hit trillions

In a bid to provide short and long-term insurancebenefits to councils across London, the Boroughof Croydon is set to lead a 28-strong team ofLondon boroughs in the creation of a mutual planof action.The London Centre of Excellence has awardedan initial grant of £35,000 for a feasibility studyinto the possibility of setting up a guaranteedinsurance mutual company.Results from the study showed that there wasmassive potential for substantial savings forauthorities involved and, as revealed by the PostMagazine, the project has been given the go-ahead and is to receive £115,000 in funding. The guaranteed insurance mutual company, forwhich an application has already been made tothe Financial Services Authority (FSA) to gainapproval, will be a joint project between the 28authorities allowing them to serve their own localauthority members in London. Funding will coverthe cost of consultants and any other costs thatmay be incurred when setting up the company –Charles Taylor Consulting will be implementingthis move.The mutual will be open to the 32 Londonboroughs and will offer cover for property, motorand liability, although packages will be bespoke toeach region. If the London blueprint is a successit is thought that other areas in the UK mayfollow suit.

London boroughscreate own company

This year’s first quarter catastrophe rates in the USare already down on last year’s results, according tothe Insurance Services Office Inc.’s Property ClaimServices unit (PCS). Seven catastrophes (PCSdefines a catastrophe as an event that causes $25million or more in insured property losses andaffects a significant number of policyholders andinsurers) caused an estimated $1.38 billion ininsured property damage, it stated.The catastrophes produced nearly 390,000 claimsin 19 states, with Missouri sustaining the largest loss,estimated at $475 million. This was followed closelyby Kansas – $113 million, Arkansas – $108 million,New York – $103 million and Illinois – $100 million.By comparison, insured property during the firstquarter of 2005 caused by catastrophes amountedto an estimated $2.14 billion.In the meantime, property and casualty rates havefallen slightly flat during the first quarter of 2006.According to a survey of the commercial insurancemarket released by the Washington-based Councilof Insurance Agents and Brokers, 15 per cent of thebrokers responding said small accounts receivedpremium quotes at renewal that were between 10per cent and 20 per cent lower than similaraccounts received during fourth quarter of 2005. Inaddition, midsize accounts were down between 10per cent and 20 per cent, according to 22 per centof the brokers, and 24 per cent of brokers said largeaccounts were down by the same percentages.

Catastrophe ratesdown overall


INSURANCEMATTERS 9

The insurance industry lags behind others in websiteperformance, according to a new study by the WebMarketing Association. The company’s recentInternet Standards Assessment Report (ISAR)showed that the insurance industry underperformedWeb benchmarks in six of the past nine years.“Content and copywriting tend to be the strongsuits for insurance websites, while they lag ininnovation due to the conservative nature and riskadverseness of the industry,” said William Rice,

president of the Web MarketingAssociation. The ISAR study providesbenchmarks for website developmentand is based on data collected fromalmost 10,000 website evaluations inmore than 80 industries over the lastdecade.Many insurance companies were latedeveloping dynamic websites, said Rice,because ‘they generally relied on a salesforce to sell their products’. They stilltend to be more focused on the agentand broker community rather than theend consumer, he said, except, that is,for the ‘few’ insurance companies thatsell their products direct to consumers.

Insurance sitesbenchmarked

In a world where people are tending to migratetowards cities or areas that are often in earthquakeor hurricane zones, insurance cover in the event ofcatastrophes is a growing business. Whether peopleare moving towards Chinese cities for jobs, or theFlorida coast for its sunny climate, there is onemajor downside to such areas and that is theirrecord for natural disasters.Insurers in such high-riskareas as Florida are backedand regulated by the stategovernment, but some largerproperty and casualtyinsurers in the state arecalling for other states andthe federal government toalso establish reinsuranceschemes. They would likemore financial responsibilityto fall to the public sector,allowing them to keepregulators happy by offeringhomeowners affordableinsurance (see p10, What’sthe cost 100 years on?).But, wrote the FinancialTimes in a recent report,‘the truth is that the private sector can perfectly wellhandle the financial fallout from catastrophes’.Despite the US market suffering record catastrophelosses for 2004 and 2005, due to a series ofhurricanes, these years were also ‘unusuallyprofitable’. In fact, property and casualty insurers inthe country made underwriting profits in 2004 forthe first time in 26 years (see also p11, Swiss Restudy trials new ratio).Tightening its underwriting standards afterSeptember 2001, the insurance industry movedaway from simply relying on returns from investinginsurance premiums. It also passed on some of the$80 billion in insured losses from last year’s

hurricanes through reinsurance contracts.Reinsurers, too, had learnt from the chaos thatfollowed Hurricane Andrew in 1992, and withstoodthe blow of 2005’s hurricanes with little difficulty.The problem for insurers, however, is thatreinsurance is becoming more expensive.Reinsurers are well aware that the number ofsevere storms is increasing and is likely to continue

doing so. Coupled with the fact that state regulatorshave been imposing price caps on insurancepremiums, it is no wonder that so many insurershave cut back the policies they offer in hazardousareas – leaving state-backed insurers with the bulkof the risk.For the customer, this inevitably means that rates(where available) will rise and remain high in areasexposed to hurricanes, according to Lloyd’s insurerChaucer Holdings. “The prices have to match therisks. The money is there, but at the moment thereis a refusal to write business at stupid prices,”commented Ewen Gilmour, Chaucer’s chiefexecutive.

The cost of hurricane cover keeps growing

The American Insurance Association (AIA), a tradebody representing around 400 major insurancecompanies in the US, has reaffirmed its support forthe country’s Free Trade Agreement (FTA) withKorea. In letters delivered to US trade officials at theend of March, the AIA outlined what it believes arethe negotiating priorities for property and casualtyinsurers seeking increased access to this importantoverseas market.The Korean insurance market would not only be

the largest insurancemarket yet included inan FTA with the US, itwould reportedly belarger than all existingFTAs combined.South Korea is theworld’s eighth largestinsurance market,with total premiumvolume of more than$65 billion – secondonly to Japan in Asia,explained one lettersent jointly by the AIAand the American

Council of Life Insurers (ACLI).“Our member companies consider the Korea FTAour highest new negotiating objective,” said MarcRacicot, AIA President. “Through good faith andcommercially meaningful negotiations, our membercompanies believe we can increase our marketshare in Korea as we have done in Japan.”As noted in one letter to trade officials, a 1986agreement technically opened the Korean marketto US companies, but there has only been limitedpenetration in the area due to several non-structural impediments of doing business there.“Because of Korea’s unique business barriers anddiscriminatory practices, we believe this FTA willhave to include new disciplines specific to therealities of the Korean legislative, legal andregulatory system,” wrote Racicot. Insurance industry priorities for the FTA includeincreased transparency in several areas of Korea’sinsurance regulation. US insurers would like to seethe creation of a standardised notice and commentperiod, equal access to regulatory information,separation of supervisory activity betweengovernment and voluntary industry groups, anddispute resolution adjudication. FTA negotiations areexpected to begin in early June.

Insurers makeKorean inroads

A Senate bill introduced on 5 April in the US could letproperty and casualty and life insurers choose to beregulated under a national insurance charter. Theproposed bill would set up a new TreasuryDepartment office to oversee insurance nationwide,but reactions to it have been mixed.Although insurance in the country is currentlyregulated on a state-wide basis, senators have saidthat a national insurance charter would allowcompanies to get new products to consumers faster,as the present systemrequires large insurers to getclearance from more than 50different regional regulatorswhen seeking to introduce anew product nationwide.“Consumers should have thebenefit of the greatest array ofproduct choices the industrycan provide and insurancecompanies should have achoice between state andfederal regulation,”commented Tim Johnson,one of the senators thatauthored the bill. “[The bill]would create a healthy insurance environment thatfosters increased competition and productinnovation,” reinforced Marc Racicot, president of theAmerican Insurance Association, a property andcasualty trade group that is backing the charter.Large insurers have also been pushing for a federalregulator for months, but some people are less keenon the idea. One trade group, the NationalAssociation of Professional Insurance Agents, said afederal charter would distract focus from modernisingthe current state-led insurance regulation system. Andthe National Association of Insurance Commissioners(NAIC) commented: “The nation’s state insuranceofficials share significant concern that this bifurcatedregulatory regime with redundant, overlappingresponsibilities will result in policyholder confusion,market uncertainty and dislocation, and a host ofother unintended consequences that will harmtaxpaying individuals, families and businesses.”The proposed bill would allow insurers to choosebetween federal or state regulation, includingwhether they get their charters or licenses from theUS or a state government. National insurers would,however, be subject to examinations every threeyears, and would have to adhere to risk-basedcapital and investment standards. The proposedTreasury office, meanwhile, would have a consumerprotection division.

Federal regulationfor US insurance

French insurer AXA SA has said it is likely to exit thereinsurance market after it received a binding offer forits AXA Re unit from Paris Re Holdings Ltd. Accordingto a report in the Wall Street Journal, AXA said that ifthe deal goes ahead it will be paid €120 millionabove AXA Re’s net asset value but declined to sayexactly how much the deal was worth.

Speculation growsover AXA future

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NEWSWIREWillis Group Holdings Ltd in France has opened

an aerospace consulting unit that will focus onproviding space insurance and aerospace consultingservices in Continental Europe, the Middle East andAfrica. The company's Inspace division now has officesin France, Malaysia, Spain, the UK and the US.

Operational income from insurance was up 22.6per cent at Groupama S.A. at 31 December

2005. This represented a profit of €776 million,compared to €633 million in 2004. The growth wasprimarily driven by an increase in non-life insuranceincome.

Lexington Insurance Co. of Boston, US, is scalingback the business it will write in catastrophe-prone

areas after last year's hurricanes dealt the insuranceindustry heavy losses. The company, a unit of AIG,will reduce its net writings for commercial andresidential properties by 20 per cent to 25 per centin areas hurricanes are most likely to generate losses.

Bermuda-based PartnerRe Ltd reported a net lossof $33.6 million for the fourth quarter of 2005.

Marsh & McLennan Companies reported aprofit for its fourth quarter 2005, compared to

a loss in 2004 due its $850-million lawsuitsettlement. Net income for the quarter totalled $35million, compared to a loss of $680 million in fourthquarter 2004. The company reported $404 millionin overall profits for 2005, compared to $180 millionin 2004.

Max Re Capital Ltd of Bermuda saw its 2005profits fall to $6.7 million due to natural

catastrophe losses. The company increased grosswritten premiums in the period to $1.25 billion, up20.2 per cent from 2004.

Los Angeles-based managed care companyHealth Net Inc. reported higher net income in

2005 as the company continued to make goodprogress in its turnaround efforts, stabilising themembership losses that have negatively affected itsprofits in the previous two years. Net income in2005 was posted at $229.8 million; compared to$42.6 million for 2004.

XL Capital Ltd of Bermuda is setting up a jointventure insurance company in Brazil and has

opened a representative office in Beijing. Theproposed joint venture with São Paulo, Brazil-basedBanco Itaú Holding Financeira S.A. would combinethe Brazilian property and casualty and specialtyinsurance books of the bank with XL's existingbusiness in the country.

Hurricane losses caused Everest Re Group Ltd,the Bermuda-based reinsurer, to post a net

loss of $218.7 million in 2005, compared with a$494.9 million profit in the previous year. Thecompany's premiums earned in 2005 totalled $3.96billion, down 10.4 per cent compared to 2004.Investment income for the year, however, rose 5.4per cent to $522.8 million.

China Insurance (Holdings) Co. Ltd aims to nearlytriple its assets to 107 billion yuan ($13 billion)

by 2010, according to a China Daily report. Thecompany owns 19 subsidiaries and its overseasoperations include the UK and Singapore, althoughits strategic focus is reportedly on the domesticmarket. The group's premiums rose by 16.4 per centin 2005, to 12.3 billion yuan.

Weathering the storms fairly well, Bermuda-based Ace Limited reported $1.029 billion in

net income for 2005. Despite catastrophe losses of$1.049 billion, Ace still managed a 99.3 per centcombined ratio for the year.

Swiss Re recently issued a catastrophe bond tocover earthquake and tropical cyclone risk in

Australia, the country's first such transaction. Thethree-year, $100-million bond, issued in February,gives the Switzerland-based reinsurer protectionagainst earthquake anywhere in Australia andtropical cyclone in Queensland.


INSURANCEMATTERS10

A powerful cyclone that devastated homes, cars andcrops on Australia’s northeast coast at the end ofMarch has so far caused insured losses of at leastAU$250 million. The final loss figure is expected tobe greater, however, according to the InsuranceDisaster Response Organisation (IDRO).

An initial rush of around 12,500 claims fordamaged homes, farm buildings, machinery, boatsand light aircraft make the estimated loss figurethe country’s ninth-biggest insurance bill from anatural disaster. The area affected by CycloneLarry is the centre of Australia’s banana industryand accounts for a quarter of the country’s sugarcane production. Economic losses are estimatedat up to AU$1.5 billion.The cyclone was similar in size to Cyclone Tracy,which killed 71 people and destroyed about 70per cent of the northern city of Darwin in 1974,leading to Australia’s third-largest insured lossfrom a natural disaster. A 45-minute hail storm inSydney seven years ago caused the biggestinsured loss of AU$2 billion.

Oz cyclone leads tolosses

Insurance industry employment in the US jumpedby 6,800 to 2.298 million in March – up 2.4 percent from the previous year. This was the strongestannual growth rate seen since the 2.8 per centincrease reported in November 1998, which wasbefore the last recession.

The data, released by the Bureau ofLabor Statistics, is only available byindustry segment on an adjusted basisfor the preceding month, so abreakdown for February was given:this month also showed a healthy 2.4per cent annual gain in insurancecarrier (as opposed to noncarrier)employment. This followed a 1.9 percent gain in January. Overall annualgrowth in insurance industry payrollsfor February of 1.8 per cent reflectedthe gain in carrier employmentcombined with a 0.8 per cent annualincrease in jobs at brokerages,agencies and related services. The annual rates of growth in

February insurancecarrier payrolls variedacross sectors: 2.0 percent for property andcasualty insurers; 1.4 percent for life, health andmedical insurers; 5.8 percent for reinsurers and10.4 per cent for titleinsurers. In thenoncarrier sector,February annualemployment rose by 0.3per cent for brokeragesand agencies; 4.0 per cent for claims adjusting and2.9 per cent among third-party administrators.

Industry jobs reach aseven-year high

With the 100-year anniversary of the San Franciscoearthquake in April, insurers have been asking whatsuch a disaster would cost the industry today. Itseems that although a quake of the same magnitudewould cause more damage and cost insurers a lotmore money, the industry is better prepared to dealwith a similar event.One hundred years ago, the earthquake that struckCalifornia, and the resultant fires in the city of SanFrancisco, killed 3,000 people, destroyed 28,000buildings and cost insurers the equivalent of $5billion. Today, calculates Swiss Re, a similar quakewould probably kill 1,200 people, destroy 45,000buildings in the city and cost $200 billion, withinsurers picking up $60 billion of the bill. This may seem like a relatively small amount forinsurers, and this is because very few peopleactually have earthquake insurance. In fact, today, 86per cent of Californian’s homeowners have noearthquake insurance. However, officials at theCalifornia Earthquake Authority (CEA), the state-runagency that carries most of the risk for earthquakes,are hoping that the anniversary of the cataclysmic

event of 1906will encouragemore people tosign up.They might verywell have difficultyfinding an insurerprepared tocover themthough. Californialaw requires aseparateearthquake policyto be offered

with homeowners policies, which those living nearfault lines tend to accept. To avoid having to offerthis potentially high-risk insurance, however –especially since an industry ‘rebellion’ in 1994 afterthe massive Northridge quake in the state – manyCalifornian insurers stopped writing newhomeowners policies. Those insurers that do offerearthquake cover, usually do not offer homeownerspolicies, so they can pick and choose which clientsthey cover and hence only offer policies to peoplein lower-risk areas.As a reaction to insurers’ actions in 1994,lawmakers created the CEA with the help of fundingfrom insurers in the state, who have also agreed topay up to $3.6 billion to help the agency coverclaims in the event of a catastrophic quake. TheCEA began selling earthquake cover in 1994 andestimates it could cover up to $7.5 billion in claims.The industry’s exposure to a Californian quake willshrink by about $2.2 billion in 2008, however,when most of its financial commitment to the CEAis scheduled to expire.

What’s the cost 100years on?

Bank of China tosell insurance armThe Bank of China has agreed to sell 51 per centof its insurance operation, ahead of its own initialpublic offering this year. A Hong Kong subsidiarythat is diversifying the scope of its business is thebuyer, according to a Wall Street Journal report.BOC Hong Kong (Holdings) Ltd is to pay HK$900million, or around US116 million, for BOC GroupLife Assurance, officials told reporters in the middleof April. The deal is aimed at boosting BOC’s non-interest income and increasing overall sales of thecompany, according to deputy chief executiveDavid Lam.The insurance transaction is reportedly not relatedto the stock offering, which is hoped to raise around$6 billion for Bank of China later this year. The bankhas around $500 billion in assets, so this sale willnot drastically affect its balance sheet.Mr Lam said the insurance deal is expected to becompleted in June.

NEWSWIREChaucer Holdings plc announced pretax

profits of £11.9 million for 2005, down 63.9per cent from 2004. The London-based companysaid its profits have been reduced by £68.5million due to losses from the series of hurricaneslast year. Gross written premiums increased 23.8per cent to £484.2 million. Its combined ratio for2005 was 101.5 per cent, compared to 88.8 percent in 2004.

ReinsuranceRe Holdings Ltd of Bermuda, whichsuffered nearly $1 billion worth of insured losses

from hurricanes in 2005, posted a net loss of$274.5 million for the year, compared with a profitof $109.7 million in 2004. This is the first time inthe company's history that it has posted anoperating loss.

XL Capital Ltd of Bermuda was hit hard bynatural catastrophe claims and a charge

associated with its Winterthur International unit,posting a $1.29 billion loss for 2005. This follows a£1.13 billion profit in 2004.

A.M. Best Co. is making modifications to itscatastrophe stress test, which in some cases will

require less capital for a company to support itscatastrophe exposure. More stringent capitalrequirements will remain in place for companies thatcontinue to use less conservative modelling tools, areperceived to have weak catastrophe management orhave limited financial flexibility.

Arab Insurance Group (Arig) has announced itshighest ever net profit: US$48.2 million for

2005. This represents an 82 per cent increase from2004. The company's gross premiums from thereinsurance business increased to US$173.7 million.Premiums from the Asian markets increased by 49per cent to US$52 million.

Significantly reduced claims expenses, reducedinternal costs and a high investment result led to

total earnings after tax of €1.79 billion for 2005 atAllianz Property and Casualty Business Germany.This is compared to €1.25 billion for 2004. Thecompany will be offering new insurance productswith assistance elements in the coming years andwill continue to pursue its strategy with assistanceservices 'intensively'.

Lloyd's of London is to open an onshorereinsurance operation in Shanghai, China. Lloyd's

Reinsurance Co. (China) Ltd will give Chinesecedents access to the Lloyd's market, themarketplace said in a statement. Lloyd's already hasa representative office in Beijing.

Munich Reinsurance Co. is setting up a lifereinsurance subsidiary in Moscow. The

company expects 'substantial growth in theinsurance markets' of Eastern Europe andCentral Asia.

A new study by Swiss Re, entitled Measuringunderwriting profitability of the non-life insuranceindustry, has shown that, over the last decade, thecontribution of underwriting to overall profitability wassmall. Using a type of combined ratio (costs and claimsas a proportion of premiums) to assess industryperformance, the study also found that during thisperiod, non-life insurers have faced difficulties earningtheir cost of capital.Sound technical underwriting has become aprerequisite for overall profitability in the current low-yield financial environment, and, as a result, thecombined ratio has received renewed attention as akey performance yardstick for the non-life industry.Swiss Re’s study has used this fact to work on the ideaof a new ‘economic combined ratio’ as an alternativeto the conventional ‘business-year combined ratio’ asa method by which to measure underwritingprofitability. The economic combined ratio isolates theunderwriting results of a certain year, avoiding minglingwith reserve additions or releases for prior years, astraditional business-year underwriting figures do. It alsoadjusts for distortions due to extraordinary losses, andtakes the time value of money into account bydiscounting future cash flows, particularly future claimspayments. Swiss Re looked at US property and casualty industryfigures for the period 1994-2004 using the economic

combined ratio and what they saw provided newinsights into insurance cycles. The main differencesfound when using the different combined ratio were:Economic underwriting profitability deteriorated from1994 to 1997, although the reported headlinebusiness-year combined ratio improved; the cycletrough was reached in 2000, rather than 2001; theaccident years 1998-2001 were considerably worsethan indicated by the conventional business-yearcombined ratio. Overall, the results showed similar economiccombined ratios for Japan, Canada, France, Germany,the UK and the US. While the years 1994-1997 and2002-2004 were moderately profitable, the period1998-2001 exhibited poor underwriting performance.The year 2004 stands out as a period when non-lifeinsurers posted sound underwriting profits, whereunderwriting contributed six to nine per cent ofpremiums to overall profitability in the US, UK,Germany and France.In all the countries examined, the 10-year averageeconomic underwriting margins before taxes werepositive, implying a positive profit contribution frominsurers’ underwriting activities. Nevertheless, whentaking into account that profits must also cover tax andcapital costs, the margins obtained in this period hardlyallowed the insurance industry to earn its underwritingcost of capital.

Swiss Re study trials new ratio

An internationalaccountingstandard for lifeinsurance jointlydeveloped byleading lifeinsurancecompanies in theUS and Japan hasbeen submittedfor considerationby theInternationalAccountingStandards Board (IASB). The 16 principles andguidance set forth in the paper are an extension toan earlier draft submitted to the IASB last year.The submission, entitled ‘An InternationalAccounting Standard for Life Insurance’, wasendorsed by the Group of North AmericanInsurance Enterprises (GNAIE) and the executiveofficers of the four largest life insurance companiesof Japan. The combination of US and Japanese lifeinsurance companies represents more than 50 percent of the world’s life insurance markets.The paper focuses on the measurement of lifeinsurance, annuities and certain types of healthinsurance for general purpose reporting; it does notinclude solvency regulation. Meanwhile, accountingguidance given does not detail the establishment ofeither the assumptions or margins used to calculateinsurance liabilities, as the groups believe that theIASB should not focus on setting technical rules forthis. The paper also does not deal with the specialcharacteristics of reinsurance contracts.Richard J. Carbone, chairman of GNAIE, explainedthe objective of the joint effort as ‘the creation ofinternational accounting standards that create moreefficient global capital markets and also reflect thebusiness model and unique features of insurancecontracts’. Koji Hanaoka, managing director ofJapan’s Sumitomo Life Insurance Company, wasequally optimistic: “The set of principles andguidance for an international accounting standard forlife insurance developed by this partnership ofnations,” he said, “is a valuable contribution toachieving the ultimate goal of internationalconvergence to a set of high-quality accountingstandards for insurers worldwide.”

US and Japan writethe rules


INSURANCEMATTERS 11

Standard and Poor’s (S&P) has revised its outlookon the global reinsurance industry to stable fromnegative. The ratings agency said that reinsurerswere in a strong financial position despite the stringof large hurricane losses last year.This sector does, however, face challenges,including reduced retrocessional capacity and thepotential for increased catastrophe losses. One S&Panalyst in New York, Laline Carvalho, explained thatat the 1 January renewals, loss-affected propertycatastrophe reinsurance business saw rate hikes of50 per cent or more, but some retrocessional ratesincreased by 200 per cent or more. The series ofhurricane losses also stemmed rate decreases forcasualty business.“Momentum is picking up,” said Carvalho, “and weat S&P believe this momentum needs to continue.”

S&P says outlookfor reinsurers is good

Following recent catastrophes around the world, GEInsurance Solutions has issued a new white paperanalysing insurer-reinsurer relationships, calledUtmost Good Faith: Reinsurance Relationships Afterthe Storm. It highlights the need to understand thethreat that natural disasters can have uponrelationships within the insurance value chain. The complicating factor in one such relationship isthat primary insurers and reinsurers displaycompeting interests. For example, a primarycompany’s first objective in the wake of a hurricane isto investigate and pay claims. This inclination is oftendriven by political pressure or lawsuits to expandcoverage beyond what was intended by the policy.By contrast, a reinsurer of necessity takes a muchdifferent view of events following a catastrophe.Initially it wants to ensure it isn’t placed in a tenuousposition due to sub-standard claims handling by its

cedant, or worse, jeopardised by deliberate efforts topass on losses that could have been avoided.According to David Newkirk, Associate GeneralCounsel of GE Insurance Solutions: “Somefundamental, but often overlooked truths emerge inthe immediate days after a large-scale disaster.” Headded that catastrophic events are not business asusual and require more communication betweenprimary and reinsurer as opposed to less. He wenton to point out that if neither side attempts to ‘play’the other, the process will flow smoothly.Furthermore, reinsurers are not without recourse ifa primary insurer acts improperly.According to the white paper, each entity brings itsown unique strengths to the table and advice offeredby the reinsurers to primary companies in the post-catastrophe environment of unique challenges isoften welcomed rather than rejected.

Resuscitating insurance links


INSURANCEMATTERS12

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Moody’s outlook is goodAt the end of last year, Moody’s changed the outlookfor the North American property and casualtycommercial lines insurance sector to stable fromnegative to reflect the strength of these insurers’earnings over the past several years. Despitemeaningful catastrophe losses, the industry showedimprovements in risk-adjusted capitalisation and effortsto maintain underwriting discipline. Now, a newreport from the ratings agency analyses what thissector has in store.Entitled North American Property & CasualtyCommercial Lines Insurance Industry, the report statesthat while the number of ratings downgrades over thenext 12 or so months will be small, there arechallenges to be faced. These include:• Catastrophe exposure. Last year’s hurricanes in theUS caused commercial insurers to report weakenedearnings for the second half of 2005. Given theunprecedented level of loss frequency and severityduring last year’s hurricane season, Moody’s expects

commercial carriers will review both their riskmanagement processes and risk appetite and will needto hold more capital than in prior years to offset theuncertainty assocated with catastrophe risk.• Price adequacy and underwriting discipline. Propertyrates in certain lines and regions increased followingthe 2005 hurricanes, while pricing in most other lineshas continued to moderate. Barring significantcatastrophes, 2006 profitability is expected to be verygood given embedded profit from 2003 and 2004,but as accident year loss ratios increase, maintainingunderwriting discipline is increasingly difficult.• Terrorism risk. With the two-year extension of theTerrorism Risk Insurance Act (TRIA), insurers havebought time to develop a more comprehensivesolution to this risk. Moody’s continues to believe,however, that since insurer deductibles represent asignificant portion of statutory capital for most insurers,this extension does not solve the financial risks posedby the specter of terrorism.

Putting the wind up the modellersCompanies providing models for the insuranceindustry, and other third-party organisations, such ascredit scoring firms, have come under attack fromconsumer groups in the US. The claim is that suchcompanies are used as political tools to justifyinsurance premium increases, rather than beingbased purely on scientific data.In a letter to the National Association of InsuranceCommissioners (NAIC), theConsumer Federation of America(CFA) and the Center for EconomicJustice (CEJ) raised questions aboutrecent upgrades in Risk ManagementSolutions’ (RMS) wind models that thegroups maintain will lead to ‘unjustifiedincreases in homeowners and otherproperty casualty insurance rates’. Theletter called for state regulation toincrease regulation of RMS and othersuch organisations, as well as creditscoring firms, whose work, say thegroups, impacts insurance rates and availability.The consumer watchdogs were reacting to a recentannouncement by RMS that the company ischanging its hurricane models to take account of theexpected increase in hurricane landfall frequencies.As a result of this increase, the company said its US

hurricane model would increase modeledannualized insurance losses by an average of 40 percent across the Gulf Coast, Florida and theSoutheast, and by a significant percentage in someother coastal regions. The consumer groups, angry with what this wouldmean for insurance rates across the country, said‘the evidence indicates that the primary reason for

the change appears to be notscience at all, but politics’. Theysay consumers were promisedthat premiums would be based onlonger-term data, and that RMSrelied on opinions from insurerslooking to increase rates to switchto the medium-term five-yearview of risk.RMS told Insurance Journal that itsmission is to ‘build models thatprovide the best possiblequantification of risk’. “We are

independent, and our approach to risk quantificationis completely objective and unbiased,” said thecompany. It also defended the changes to itshurricane models, stating they ‘reflect expectationsof sustained higher average levels of hurricaneactivity over at least the next five years’.

Spanish insurers managed to shrug off the effects of aprice war over car driver policies to boost their overallnett profits by more than 20 per cent to €3.58 billionin 2005. This represented a return of €8.07 for each€100 spent on policies, up from €7.30 the previousyear, according to the industry's official researchorganization, the Investigacion Cooperativa entreEntidades Aseguradoras (ICEA).Even the car sector, which has seen a general fall inpolicy prices over the past two years, eventuallymanaged a rise of 4.2 per cent despite the downwardtrend continuing until the end of the third quarter. The biggest increase, of a little over 40 per cent, wasin the multi risk sector, where pre-tax profits rose to€538 million, while the health sector also showed ahealthy 12.2 per cent gain at €287 million.

The non-life sector, which includes travel insurance,notched up an overall 16.7 per cent increase to€3.24 billion with an average profit return of 13.5 percent on policies, up from 12.6 per cent in 2004 andjust 5.05 per cent in 2002.Speaking at an ICEA open day in Barcelona, wherethe figures were released, Mirenchu del Valle,secretary of the insurers’ body, the Union Española deEntidades Aseguradoras y Reaseguradoras (UNESPA)warned that the lack of self-regulation on transparencyin the sector could prompt a backlash fromgovernment authorities.UNESPA has now launched its own non-obligatoryguide to improve the image of the sector, she added,although complaints from the public were few andsatisfaction levels with clients above 70 per cent.

Good news for Spanish insurers

ING Group has announced it has received a licensefrom the relevant insurance supervisory authoritiesto start life insurance operations in Bulgaria. Thebusiness will be operated as a branch of ING’sexisting life insurance company in Hungary and willbe headed by Nikolay Stoykov in Sofia.“The start of the Bulgarian life operation is a fineexample of regional synergy,” said Tom Kliphuis,

CEO Central Europe of ING. “By combining theexisting resources and know how of ING’s pensionfund activities in Bulgaria with the product, actuarial,distribution and financial expertise of our Hungarianlife company, we will be able to make a swift andefficient start. We will use the administrative systemsof ING Hungary as a basis for the Bulgarianoperation.”

New entry into Bulgarian market


HEALTHMATTERS 13

Other factors inDVTResearch into the link between Deep VeinThrombosis (DVT) and air travel continues apace,with new findings from the Netherlands furthersecuring this relationship. Although crampedconditions on aircraft have long been blamed for theincrease in the risk of developing fatal blood clots,other factors may also play a part, say researchers.DVT, often referred to as ‘economy classsyndrome’, usually develops in the legs and can befatal if the clot moves around the body to the lungsor the brain. Professor Frits of Leiden UniversityHospital compared concentrations of markers forblood clotting in 71 healthy people before, duringand immediately after an eight-hour flight. The studyfound that factors such as low pressure and lowoxygen levels in aircraft might also contribute to agreater risk of developing DVT.Rosendaal and his team looked at markers in thevolunteers after an eight-hour flight, eight hours inthe cinema and eight hours doing daily activities. Itwas found that concentrations of the clottingmarkers were higher in people after a long flightthan they were after the other two scenarios. Thiswas particularly the case in people who had otherrisk factors for DVT, such as a genetic propensity forclotting or those women taking oral contraceptives. Farrol Kahn, director of the non-profit groupAviation Health, said this was a significant studybecause it established a ‘solid link’ between air traveland DVT. Co-author of the study, Dr SuzanneCannegieter, commented: “It was never sure if allthose people had not been in an airplane but in acar for the same time, then maybe they would havethe same problems. From this study it seems that isnot the case.” Travellers are advised to avoid taking sedatives ordrinking too much alcohol during a flight.Compressive stockings that improve blood flow canalso help prevent clotting.

Sewage hurtsWaikiki beachesAfter a bout of glorious sunshine brought a flock ofswimmers and surfers to Waikiki beaches at thebeginning of April, officials had to close a stretch ofshoreline due to high levels of bacteria in the waterfollowing sewerage spills. The state healthdepartment ordered the beaches closed after themeasurements were taken and health teams alertedofficials to the potential dangers.State tourism liaison Marsha Wienert also had to talkto several hotels to instruct them to notify guests ofthe closures. The bacteria levels are now believedto have returned to normal, with the sun killing offthe bacteria and sewage spills having been takenunder control.The bacterium found in the water can cause chills,abdominal cramping and diarrhea, if ingested.Around 1.8 million gallons of sewage spilled into theAla Wai Canal when a power failure shut down theAla Moana Pump Station, according to the city. Anadditional 6,900 gallons of sewage overflowed frommanholes at Ala Moana and Atkinson boulevards.The spills followed a massive discharge of sewageinto the canal following a 42-inch main break. Some40 million gallons of wastewater went into thewaterway and then out to sea.

Mumps epidemicsweeps IowaA mumps epidemic that has struck Iowa in the UShas reached record levels, baffling US health officials.At the beginning of April, 515 confirmed, probableor suspected cases had been reported to the IowaDepartment of Public Health since mid-January.The Federal Centers for Disease Control and

Prevention(CDC) said thiswas the biggestoutbreak since269 cases werereported inDouglasCounty, Kansasfrom October1988 to April1989. CDCdefines anoutbreak as fiveor more casesin aconcentratedarea.

Iowa state epidemiologist, Dr Patricia Quinlisk, said:“We’re trying to figure out why it is happening inIowa and why it is happening right now. We don’tknow.” She added that mumps has spread to morethan a third of the state and does not appear to beconfined to certain age groups or other sectors ofthe population.The problem now appears to be spreading not justwithin the state but also out of the state, however.Health officials believe two travellers are responsiblefor the appearance of mumps in six otherMidwestern states. As of mid-April, Nebraska had43 reported cases; Kansas, 33; Illinois, four;Wisconsin, four; and Minnesota, one. As a result,the CDC put out a travel advisory about the airtravellers to state health departments.

What are the odds?What are the odds of picking up germs whiletravelling by plane? Well, they range from high toalmost certain. Germs – other people’s germs – areeverywhere all the time, but the confined space ofan aircraft cabin does mean germs are transmittedbetween people more effectively in these situations.For those ‘germophobic’ passengers, however, helpis at hand like never before. A range of productsthat protect youfrom anything fromhead lice to agrumbly tummy isnow widelyavailable, and theproducts are notjust for those withobsessive-compulsivedisorders.It is notuncommon thesedays to seepassengers wearingmasks, disposablebooties or fixingpurifying filters to the air vent above their seat. Theyobviously have no concern for how conspicuousthey look, but the aim is to stay healthy for yourholiday. Others travel with their own blankets andpillows, or use seat covers, head rest covers, orspray their seat down with lice repellant. Medical experts, however, have said that many ofthese products are more affective at quellingpassengers’ psychological issues, rather thanproviding any real protection against spreadingdisease or viruses. Hand washing is the thing theycome back to time and again as the most effectiveway to stop the spread of infection. A bottle of handsanitizer is also a good buy if you feel the need topurchase some form of protection for your journeyby air.

MRSA spreadsaround the worldA six-month study carried out by The Australian

Group for Antimicrobial Resistance has revealed thatcontraction of golden methicillin resistantstaphylococcus aureus (MRSA) is on the rise acrossAustralia and around the world. The study dubbedthe spread ‘a major clinical and public healthproblem’, with infections almost doubling from2000 to 2004.The causes and transmission of community-onsetMRSA are confusing due to variations in virulence,infection range and the sensitivity of antibioticpatterns. A difference therefore exists betweenMRSA strains that circulate in hospitals and infectionsfound in the community, caused by healthcareassociated strains (HA-MRSA). Although thesestrains do not spread readily within the communityfrom person to person, the latter strain (HA-MRSA)is well documented. The discerning factor is thelevel of a patient’s risk. For example recenthospitalisation, surgery antibiotic medication, chronicmedical conditions, long-term care and healthcareoccupational status will all have their part to play.

China guardsagainst infectionFollowing the completion of the first railway linkingthe Himalayas, China hasstepped up its vigilance inguarding against the spread ofa rat-borne plague outbreak.Carried by fleas andmarmots, the disease isspread via fleabites in humansand once the bacterium ispresent in bodily fluids, it willspread easily through thehuman population.“The disease is likely tospread to more areas withthe start of the Qinghai-TibetRailway this summer, as therailway can carry infected ratsand people to denselypopulated areas,” said Wu Jian, from the ChineseState Forestry Administration. “The spread iscurrently under control due to lack of access toremote affected areas in Tibet, Qinghai and InnerMongolia. But once the railway is operational,controlling the spread of the plague may be difficult.More people will be endangered.”According to a survey by three governmentagencies, the rats have caused damage to as muchas 1.4 million hectares in 2006, up by 26 per centfrom the previous year. Reports suggest that thedisease can be controlled by antibiotics, but poorlevels of healthcare in remote areas has resulted in40 to 60 per cent fatality rates.In 2004, in Nangqen County, Qinghai the diseasespread among four families and killed six people bythe time officials at the disease control centre wereinformed. Elsewhere, between 2001 and 2005, 24people died from the disease, with victims normallycontracting the infection while hunting marmots,according to official reports.

Editorialcomment

In this issue,we return tosome of thematters thathave reallydominated thetravel insurancemarket inrecent times.While issuessurroundinglost baggage,pre-existingconditions andannual policycost savings arediscussed inour Newssection, wealso have aninterestingreport on family travel policies and what theydo and do not offer separated and extendedfamilies. Another lead story this month details ING’snew acquisition in Canada. This deal pertainsto the creation of yet another new behemothin the travel insurance marketplace – hot onthe heels of the last important acquisition: thatof Travel Guard by AIG, as detailed in ourprevious issue. What do these ‘giants’ meanfor the future of the industry? And is this thefuture of the market? Our News Analysisfeature attempts to answer these questionson p22.Elsewhere in this issue, we have features onmedical screening, and what the UK’sDisability Discrimination Act means forinsurers. Our World Markets section analysesthe business potential of Latvia and Lithuania,and our regular sections bring you the latestfrom the air ambulance industry, global travelhealth issues and world events affecting travel.You may very well be reading this issue atVoyageur Group’s International TravelInsurance Conference (ITIC) in Brighton: ifso, I hope you have a productive conferenceand I look forward to meeting some of youthere.

Sarah LeeEditor

HIV infection ratesfall in IndiaThe number of new HIV infections in four southIndian states, which are home to most of India’s 5.1million people with the virus, has fallen by a third,according to a study in medical journal The Lancet.India has the world’s second-highest number ofHIV/AIDS sufferers, but active surveillance and robustpeer intervention among high risk groups such asfemale sex workers has had an impact in the south,the Indo-Canadian study, carried out by the Universityof Toronto and an Indian research institute, revealed.The report also stated that HIV prevalence amongwomen aged 15 to 24 years in the states of TamilNadu, Maharashtra, Karnataka and Andhra Pradeshhad fallen from 1.7 per cent to 1.1 per cent in a four-year period. New infections fell by 35 per centbetween 2000 and 2004, while the four statesaccount for 75 per cent of HIV cases in India.“We are seeing a decline and it’s real,” said Dr PrabhatJha of the Center for Global Health Research at theUniversity of Toronto. The team added that newinfections among men visiting STI clinics in the fourstates fell by 36 per cent. They attributed this to thepromotion of condom use, along with loyalty to one’sspouse, by the Indian anti-AIDS strategy.However, the study warned that gaps remained inHIV surveillance in north India, home to populousstates like Uttar Pradesh and impoverished Bihar witha combined population of 250 million.“The northern states are much more of a challenge asthere are fewer HIV surveillance sites,” Jha said.Elsewhere, there was more good news in the battleagainst HIV from San Francisco in the US, where newcases have fallen by almost 10 per cent over the pastfive years, according to the city’s Department of PublicHealth. This is the first decline in infections since thelate 1980s, health officials added.The number of new infections fell from 1,084 in 2001to 976 in 2006, which officials were surprised by, asthe city’s gay male population has increased by 25 percent in the same period.“This is great news, we’re making progress,” saidMark Cloutier, executive director of the San FranciscoAIDS Foundation. “But I think it is both bad planningand bad public policy to look toward the future basedon a ‘short-term trend’. We don’t know how long thiswill last.”

Measles gripsGermanyMore than 400 children have been diagnosed withmeasles in Germany’s Ruhr region, and the sourceof the outbreak is unknown. Health officials areurging parents to make sure their children areimmunised with the joint measles-mumps-rubella(MMR) vaccine.Problems have arisen, however, due to worriesabout the safety of this jab. Germany reportedextensively on the MMR’s alleged link to autism,which deterred many families from seeking thispreventative medicine for their children.Measles can be transmitted from person to personvery easily, and an infected person coughing on abus, for example, can easily spread the disease toa non-immunized person. Officials say there couldbe around 600 cases in Germany by the beginningof May.


HEALTHMATTERS14

Northern Thailandis a no-go areaNorthern Thailand has become something of adisease black spot with outbreaks of botulism,malaria and tuberculosis on the rise. A religiousfestival that took place during the middle of March inthe Nan Province led to 152 of the 170 peopleattending developing symptoms of botulism –dysphagia, dysarthria, ptosis, abdominal discomfortand abdominal weakness. All those affected hadeaten pickled bamboo shoots prepared in thetraditional manner, with symptoms developing andprogressing over 24-48 hours followingconsumption. Of the 152 victims, 100 had to behospitalised and 40 required respirator support. Todate, no deaths have been reported.Disease control is inhibited in this area by internalconflict and undocumented migrants passing overthe Myanmar-Thailand border. Around 6.8 millionpeople populate the 10 Thai provinces borderingMyanmar. There are over 120,000 displacedpersons in nine UNHCR-run camps and anestimated 500,000 to one million registered andundocumented migrants. The undocumentedmigrants are the largest public health concern, asmany do not have access to health services, haveincreased morbidity and present a number of healthrisks, such as low immunisation rates.The highly mobile, cross-border migrants causemost concern as they increase transmission rates ofdiseases such as multi-drug resistant tuberculosis,meningitis, diphtheria, measles and drug-resistantmalaria.

Air battle in SpainSpain’s new budget airlines and flag carrier Iberiaare stepping up their offers in a bid to fight offthe growing threat to their home market posedby Europe’s biggest no-frills companies. By DavidIng

Last month, Air Madrid, which began operationsflying to Latin America, expanded its short-haulnetwork in Europe to includeinternal flights to the BalearicIslands, before adding Tel Aviv inearly April.Meanwhile, Vueling, which startedin Barcelona in mid-2004 andwhose backers include USspecialist JetBlue, plans to doublepassenger numbers to four millionthis year, principally throughincreasing the number of Europeanand national flights it operates outof Madrid. Iberia, which isreported to be looking at creating its own budgetcarrier to thwart the growing competition, hit backin March with a new permanent low-fare ticketquota offering seats in western Europe starting fromas little as €10.So far, Europe’s two largest low-cost airlines easyJetand Ryanair have made major inroads on UK-to-Spain routes. But, having established itself as thebiggest foreign airline operating out of both Madridand Barcelona, easyJet is now looking at the capitalto set up a new southern European base. The ideais to take advantage of the space in the originalterminals freed up by the opening of the new T4terminal at Madrid in February.EasyJet’s regional director general Arnaldo Muñozhas described Madrid as ‘the European city with themost growth potential’, as he negotiates a newconcession that would see the airline launchdomestic as well as new European routes and, forthe first time, plans to fly to north Africa.

Poor road infrastructure could cost the Kenyantourism industry dear if it discourages investment inthe country’s tourist sector, according to the KenyaTourism Federation (KTF), the Kenya Association ofTour Operators (KATO) and the Kenya TouristBoard (KTB).The group of tourism industry stakeholders havesent several memoranda to the government callingfor work to be done to improve the situation, butKTB chairman Jake Grieves-Cook feels something

needs to be done now: “Accessroads to most of our key touristattractions are not motorable –a challenge we have beenhighlighting for the past twoyears and we are still pushingfor the same.”Even roads leading to theMaasai Mara Game Reserve,the world’s leading safaridestination, are in a deplorablestate, which has forced manytourists to shelve plans for arepeat tour of the country. Thetour operators have alsosuffered, as they are forced tospend more on maintainingtheir vehicles.The KTB’s performance statisticsreleased at the beginning of theyear, showed that the country’s

earnings from tourism rose by 16 per cent in 2005 toKsh48.9 billion ($682 million) and Dr AchiengOngong’a, KTB managing director, is optimistic ofbetter performance in 2006. However, with anincreasing challenge from competing destinations, suchas South Africa, Morrocco, Tanzania and Egypt, thecountry’s infrastructure – roads, hotels and serviceindustries – takes on an increasing significance.

Kenyan tourismsuffers road failure

Railroad accidents and injuries to railroad workersdropped last year and the rate of crossing collisions fellto an all-time low, according to the Federal RailroadAdministration (FRA). Overall train accidents in 2005decreased by 7.9 per cent to 13,388, including an 8.4per cent drop in derailments.“Railroads are making progress, but we still have milesto go with our safety programme,” US transportationsecretary Norman Y. Mineta said. A spokesman forthe FRA added that there were 3,010 collisionsbetweentrains and carsat gradecrossings lastyear, whichrepresents3.81 collisionsper milliontrain miles,the lowestannual rateeverrecorded.The injurytotal for railemployeeson duty fell12.7 per centto 5,430cases, theFRA stated,with 25 employees killed in train accidents.Mr Mineta launched the National Rail Safety ActionPlan in 2005 to target the most frequent causes oftrain accidents. The project includes testing oftechnology to identify cracks in rail joints, monitoringtrack switch positions in dark or non-signalled territoryand providing timely information on hazardousmaterials to first responders in accidents.

US railways aresafer than ever

A study undertaken by the World Travel andTourism Council (WTTC) in Moscow has revealedthat the Russian Federation is underplaying its touristvalue. Titan tourist members of the WTTC, whichinclude Hilton, Hertz and Air France, encouragedthe study, as they believe the Russian Federation is

not fulfilling its vast potentialwithin the world travelmarket.This is indeed the case,according to Jean-ClaudeBaumgarten, president of theWTTC, who said: “TheRussian Federation has thepotential to be one of theworld’s leading travel andtourism economies, but thepotential is still a long wayfrom being realised.”

Statistically, direct spending on tourism in Russiaamounts to just 1.5 per cent of the country’s grossdomestic product for 2006 – half the EuropeanUnion average. The WTTC estimates that863,000 people work directly in the tourismindustry in Russia, although this figure climbs to 4.5million jobs when indirect economic effects aretaken into account. In order to develop these figures, Baumgarten hascalled for more active support and involvementfrom the government. This includes developmentand investment in the Russia brand; a cut inbureaucracy and a ‘wiser’ tax system; promotingregions within Russia; instituting special tourismzones where investment in infrastructure will benefitfrom certain tax breaks; and making it easier forforeign countries to invest in Russia. In 2005 Russiaonly spent $36.5 million on promoting itself abroad,a staggering one tenth of the $32.9 million investedlast year by Finland, according to the UNWTO.

Russia’s tourism istoo tentative


TRAVELMATTERS16

Optimism rises forglobal recovery

With the years from 2000 to2006 cited as the worst sixyears in aviation industry history,a sense of optimism is finallyreturning to the market.Recovery is officially complete,with 2006 looking set to be apivotal year.The slump that was provokedby the 11 September terroristattacks was undoubtedlyenhanced by costly fuel, growthof low-cost carriers and toomany seats on sale. Directorgeneral of the International AirTransport Association (IATA)Giovanni Bisignani has predictedthe smallest global loss this year:$2.2 billion; followed by a profitof $7.2 billion for 2007, a figureup from a prior projection of$6.2 billion.Airlines globally have lost morethan $50 billion since 2000,including about $40 billion byUS carriers alone. Two major

carriers in the US filed for bankruptcy in 2005, butothers were able to pull out of a nosedive that beganin 2001. Total losses for 2005 were approaching $30billion, one of the most promising results since theeconomic downturn of 2001, enabling 2005 to beviewed as a ‘nearly good’ year – were it not for therapid rise of fuel prices, many airlines could evenhave turned a profit. Now, with rising fares and falling labour costs in theUS, plus improving economic conditions elsewhere,there is room for optimism. According to SouthwestAirlines chief executive Gary Kelly: “The economy iscontinuing to grow at a healthy rate, business travel iscontinuing to pick up, and industry capacity hasmoderated and even shrunk in some areas. If allthese underlying conditions continue, we ought tohave a robust revenue production for the industrynext year.”Yet while the trend is positive, sustainability is notguaranteed. Overall, the airline industry will post aloss of more than $4 billion this year, according to theIATA, which has also predicted that airlines will notsee a profit until 2007. This profit is still tempered byoil prices, which have been termed ‘the single biggestchallenge for airline profitability’ by Mr Bisignani.Fuel prices are expected to rise 15 per cent in 2006before declining until 2011, according to estimatesfrom the Federal Aviation Administration in its 31stannual industry forecast.Any upturn for the global aviation industry translatesinto a gradual decrease in bargain fares for passengersand more crowded aeroplanes, as the skies get morecongested. The number of airline passengers looksset to rise from almost 739 million in 2005, to morethan one billion in 2017.


TRAVELMATTERS 17

Delta spreads wingsdespite strike action

Delta Air Lines has been in bitter strife with its pilotsover pension payments since seeking bankruptcy-court protection last September. As this dispute isreferred to a panel of arbitrators, Delta looks set tofeed its international expansion plans by increasingflights into New York City’s John F. KennedyInternational Airport.Although this airport has previously provedchallenging for many major US air carriers, partlydue to its proximity to Manhattan, Delta believesthat the creation of this new hub will enable it toinstigate major international expansion plans, whileseeking to lessen its traditional exposure on money-losing domestic routes. Delta first said in January2004 that it would pump $300 million into anexpansion plan of its service at Kennedy, but thisplan was derailed by the 11 September 2001terrorist attacks.The third-largest US airline in terms of traffic, withover 6,000 pilots, Delta believes it can make asuccess of this initiative by using regional airlines andits small jets to feed domestic passengers to JKF. It isseeking to add short-haul flights from cities such asPhiladelphia and Baltimore.Industrial troubles, however, remain rife, with Deltapilots striking to express their frustration with thestate of negotiations over long-term pay cuts. Theairline wants the pilots to take an additional 18 percent pay cut, reducing their average salaries to$144,440. Moreover, the pension plan that coversthousands of Delta Air Lines pilots is underfundedby $11 billion and looks set to be terminated inbankruptcy court. If terminated it would representthe largest corporate pension plan default in UShistory.

What will theycharge for next?The aviation industry has been awash with bankruptciesand closures, but is this excuse enough to start chargingfor every given extra, even down to aisle seats? Withthe sector in fierce competition, looking for new waysto boost revenues is inevitable.In the US, contenders for the top ‘no-frills’ spot includeAmerican Eagle, Northwest Airlines and United Airlines.American Eagle was the first on the ladder with theirbrash step of charging for non-alcoholic drinks. But theattempt was short-lived and, just two months into theexperiment, negative customer feedback brought thisto a halt. Not perturbed by these findings, the airline,which removed pillows from flights last year, citing theadditional cost of cleaning the airplane between trips,also removed its food service on most domestic flights.It believes there has been a more positive response tobuying pillows, blankets or nuts and is looking to theseresults for its next strategy.Next came the turn of Northwest Airlines, whichbegan to charge for those areas in economy class thatoffer more legroom, such as emergency-exit rows andaisle seats. Under the carrier’s new ‘Coach Choice’,prime seats are sold at $15 more per flight, 24 hoursbefore check-in.According to analysts, the possibilities for specialist feesare almost limitless, the only question iswhich carriers are willing to run the riskof alienating customers if they charge forservices that do not have special feesattached on other airlines? It is suggestedthat in the not-too-far-distant future,carriers will require special fees even tocheck in a bag. In fact, this has alreadybeen discussed by budget carriers, whohave been fielding the idea of chargingfor luggage (this is so that fees arerepresentative of those who areresponsible for the added weight, ratherthan spreading the cost across allpassengers). Universally, carriers havecut meal services on shorter flights inthe coach section, and many are nowcharging for food, drinks andentertainment. Tackling the matter with a more creativenuance, United Airlines introduced apassenger fee allowing upgrade tounsold seats in a better section of theplane. Its pillows, blankets and headsets remain free,but it expects to boost revenue by about $50 million in2006. Similarly, American Airlines boosted its ownrevenue on top of ticket sales by 22 per cent in thefourth quarter 2005 to $350 million – includingcharging customers $25 for same-day flight changes.Additionally, the high end of the market is also beingtargeted, with start-ups Maxjet Airways and Eos Airlinesand United’s PS catering to this sector’s, long-haulservice. According to Maxjet chief executive officer GaryRogliano: “Eighty per cent of our customers are comingfrom the premium cabins of our competitors. We giveyou everything and reduce the price 75 per cent.”

Australians have had a love affair with cruising formany years, with a number of cruise shipsoffering itineraries around the Australian coastlineand to nearby ports across the Tasman and toislands of the South Pacific. Roger Allnutt reports

In recent years, more and more internationaltravellers are discovering Australia as a cruisedestination, with enormous benefit for localoperators and tourism facilities around the coast.A recently completed study, jointly funded by theAustralian government and Cruise Down Under,analysed the economic impact of the sector eachyear between 2004-05 and 2006-07.The study revealed that the number of port visits bycruise ships carrying international tourists isexpected to increase by 32 per cent this year,demonstrating the strong growth of the $228-million cruise industry, which generates about 1,600local jobs.“Cruise tourism is on the rise with Australia well andtruly on the radar screens of tourists in search of abit of r&r on the seven seas. On average, about1,800 international tourists visit an Australian porton a cruise ship every week,” said Fran Bailey,

Minister forSmall Businessand Tourism.The study alsoshows thatcruise shipsspent 325days atAustralianports in 2004-05. This isforecast toincrease by 32per cent toapproximately430 days in2005-06.Cruise ships inport cancontribute upto $1 millioneach day.“The strong

growth in port visits is great news for localeconomies. Tourists go shopping at port, shipsrefuel and restock and the crew take a well-earnedbreak – all of which puts dollars into the pockets oflocal businesses and creates hundreds of jobs,”Bailey added. “The Australian government is keento unleash the potential of cruise tourism. We havejust launched our new international tourismcampaign and are currently reviewing the cruiseindustry to help create even more jobs.”Chairman of Cruise Down Under, Richard Doylesaid the report demonstrates the strong economiccontribution and future promise of this niche sector.

Oz cruise industryis buoyant


COMPANYBRIEF18

Rowland Brothers International (RBI) now hascommercial repatriation offices in Iraq and Afghanistan,according to senior partner Tony Rowland.“For some time now, we have considered settingup agencies in Baghdad and Kabul,” said Rowland.“These areas present a particular challenge, giventhe unsettled situation in both countries. Themilitary will maintain a presence there for theforeseeable future, but they are now joined by anincreasing number of civilian personnel. Thoseorganisations that send their employees abroadneed reassurance that they can bring them home,sometimes in the saddest of circumstances. We feelthat we can now offer a repatriation service fromboth countries.”Ops manager Melanie Walkling spokeabout their experiences so far: “Ouroffice in Baghdad or Kabul researches thelocal situation and feeds back theinformation we need to plan therepatriation. There are numerousunpredictable factors which may hampera normally straightforward process –curfews introduced without warning,hostilities, airports closed due to securitythreats or bad weather – so unfortunatelyit is not always possible to predict howlong the repatriation will take. We expectto supply an estimate within 24 hours,and ideally like to proceed as quickly aspossible to minimise risk and theopportunity for local circumstances to change.Timing is an important factor.”Costs for these high-risk repatriations to or fromIraq and Afghanistan are assessed individually, andwill vary depending on the circumstances.

RBI sets up officein high-risk spots

Citybond Suretravel, an ITT Corporate member,has been appointed official travel insurance providerfor the ITT conference in Oman and is offering alldelegates up to seven days free cover for onlinebookings. Travelling companions can take advantageof a reduced premium and a five-day extension isavailable for a further fee. The conference runsfrom 11 to 14 June.

ITT Conferencenames provider

Africa Air Rescue(AAR) and KenyaAssociation ofTourist Operators(KATO) havelaunched anEmergencyRescue Safariinsurance policyfor tourists visitingEast Africa. For afee of Sh1,000(US$1 = 72.15shillings) thescheme offersemergencyrescue andevacuationservices for 15days per tourist.William Kamunge,Kenya Tourism Federation (KTF) chairman, said:“The first 24 hours of an emergency has beennoted to be extremely difficult for any operator asthey have to manage rescue and evacuation withtheir own resources.” He added that it was alwaysdifficult to activate overseas insurance when anemergency call came in to the KTF safety centreregarding an incident that need evacuation, so therewas a call for some form of commitment locallybefore international services were rendered.AAR managing director, Stephen Maina, said theproducts was created after months of researchand preparation by AAR and Kato experts andpledged that his company would use its widenetwork of healthcare providers to ensure a rapidresponse in the event of an emergency anywherein East Africa. So far, ten tour operators havesigned up to the scheme.

Emergency cover inEast Africa

During the winter holiday period, Europ AssistanceFrance set up a system for the group repatriation ofcustomers who had skiing accidents in the Alps. Ontwo consecutive Fridays, a first class high-speed train,known as a TGV, carriage was speciallycommandeered for injured people and their families.The train set out from Annecy and Chambery andtook the injured to Paris. A team of five assistanceagents and a medical manager from Europ AssistanceFrance were on hand throughout the trip, until thevictims were taken away by ambulance on their arrivalat Gare de Lyon in Paris. In total, 26 people and theirfamilies were repatriated on 10 February and 19people a week later.

First-class return forinjured skiers

24:7 Assist hasannounced theacquisition ofInternational MedicalRescue (IMR) in amove designed tocreate a single,independent globalassistance provider.The new companywill continue toprovide 24-hourmedical assistanceand repatriationservices worldwideto the travel andinsurance market.The company has stated that its new strategy willfocus on strengthening relationships with currentclients and developing new contacts through theprovision of good value, high quality services. Chiefexecutive officer, Shlomi Kariv, said: “We aredelighted to have such a strong, well-establishedteam on board in IMR. The combined expertise andstrengths of both companies will be a greatadvantage to us and our clients and the marketresponse has been very positive.”

24:7 just gotstronger

Amadeus has formed a partnership with ACEInsurance to offer online travel insurance productsthrough travel agencies in Hong Kong. Thecollaboration will make ACE the first company inHong Kong to provide travel insurance productsthrough Amadeus.According to Industry estimates, the travel insuranceindustry in Hong Kong is estimated to grow at 10 to15 per cent in coming months, while Amadeuscurrently processes around 100,000 insurancebooking per year in the region.Richard Wyber, general manager accident andhealth for ACE (Hong Kong), said: We haveworked hard to ensure we have a slew of travelinsurance products that can provide both world-class financial protection and medical assistanceshould our customers require our help. We arevery pleased to be working with Amadeus in apartnership that will ensure customers receiveoutstanding value and service.”

Online insuranceoffered in Asia

ResortQuest, the holiday property rental arm ofGaylord Entertainment Co., is getting into the travelinsurance business through a deal with Travel GuardInternational. The insurance offerings through TravelGuard include hurricane coverage and a hurricanerelocation service, which allows customers to movetheir reservations to another ResortQuest locationduring the same scheduled dates. Other coverageincludes medical emergencies and lost luggage.Travel Guard insurance is underwritten by AmericanInternational Cos. and Arch Insurance Group Inc.,according to the company’s website. Financial termsof the deal have not been disclosed.Nashville, US-based ResortQuest has a portfolio ofnearly 17,000 holiday rental properties with acombined real estate value of about $7 billion andemploys more than 4,000 people. In 2005, thecompany had revenue of $224 million, according toSecurities and Exchange Commission filings byparent Gaylord Entertainment.

ResortQuest offerstravel insurance

UK company Bradford & Bingley’s travel insurancepolicy is being adapted to cater to the growingnumber of older travellers. Age limits for annual tripand single trip insurance have been raised from 74and 79 respectively, to 79 and 85.With one in 10 travellers over the age of 65 inthe UK going abroad without travel cover, thecompany feels it needed to offer a better deal tokeep the older traveller protected. David Foyle,head of general insurance at Bradford & Bingley,said: “Interestingly, the two age groups to showthe steepest increase in international travel since1993 are 55-64 year olds, with a huge 140 percent increase, and over 65s, with a 110 per centincrease.” The main reasons for this trend, hesaid, were people enjoying better health forlonger and this generation having more money tospend in retirement.

Older travellersreceive more support


AIR AMBULANCENEWS 19

How has Hawaiihandled tragedy

Hawaii Air Ambulance (HAA) experienced an entireshut down of services following a fatal crash on 8March, which killed three crewmembers. TheFederal Aviation Authority (FAA) requested a totalgrounding of all HAA medical transport planes untilthorough inspections of its maintenance records andoperations could be carried out. The inspection,which has extended beyond the federal agency’snormal participation in a post-crash investigation,was prompted by the company’s two fatal crashesin two years, which raised a ‘red flag’.HAA has been entirely cooperative in the matter,with company chairman and chief executive officerAndrew Kluger voluntarily grounding the company’sthree airplanes for the inspection. In the interim, 10nurses and medical personnel from the companyhave been flying as volunteers from Hilo, Maui andHonolulu on Coast Guard C-130 medical flightsbetween islands.The latest turn of events has prompted othercompanies to apply for an emergency certificate ofneed to start providing patient transport services.Four companies filed applications seeking approvalfrom the State Health Planning and DevelopmentAgency for an emergency certificate of need toprovide inter-island aeromedical services, and one isplanning to start without it. The applicants includeBig Island Air, O’ahu-based Pacific Medical Assets,ACI Pacific LLC and AirMed Hawaii LLC. Despitethe fact that the HAA could be headed back to fullservice, all applications will have to be considered. The inspection found nothing out of the ordinarywith the HAA’s planes and, in addition, the FAAconducted a review of all pilots, who weresubsequently cleared to fly. Just under a month afterthe crash, HAA returned one of its planes to theskies and could soon have as many as three planesflying missions again. The coastguard will continueairlifting patients in need of critical care from theNeighbour Islands to O’auhu until full service byHAA resumes.

India’s emergencyservice gets its wingsIndia’s emergency services have recently beenairborne on two occasions. However, there is aglaring difference between the costs of the twoservices that were offered.The state of Gujarat has procured a Piper Seneca IVfrom the US and has improvised to turn the twin-engine, six-seater aircraft into an air ambulance foremergency treatment. Operated by AhmedabadAviation and Aeronautics Limited (AAAL), it hasjoined forces with Apollo Hospitals for the air-evacuation of patients. The air-ambulance, whichcan be used by all hospitals, has been supplied witha team ofdoctors,paramedicsandmedicalequipmentfromApollo.“The airambulancehas beenfitted withultra-modernICUfacilities andwill be aboon formanyemergencypatients,” explained Apollo CEO AlexanderKuruvilla. Gujarat and Rajasthan have 35 and 40airstrips respectively, which can be used by the airservice and will prove crucial for patients sufferingcardiac and trauma emergencies. Marketingmanager at AAAL, VK Nagar has attempted to keepthe cost of air evacuation relatively low, fixing aflight-per-hour figure of Rs29,500.Meanwhile, private security firm Tops Security Ltdhas launched their own air ambulancetransportation service for individuals and institutionsin India and abroad. The company is providing airambulance connectivity through a chartered fleet ofaircraft and has secured the support of internationalair ambulance service providers.According to Tops CMD Diwan Rahul Nanda: “Wehave a tie-up with several foreign players and evenwith commercial airlines to provide ambulanceservices.”The company also has aspirations to create the next911 service as in the US or 999 service as in theUK. However, while this service may reach you ontime, it comes at a more expensive cost ofRs75,000 an hour. Consequently, an average rescueoperation will cost around Rs300,000. Moreover,the plane will not take off from the base stationunless the fee is paid in advance. When questionedabout this, Nanda reportedly said the high cost isnot an issue: “When it is about the life of a dearone, people never think about the money.”

New 911 flagshipreduces boundariesNetcare 911 in South Africa has bolstered its airambulance fleet with the purchase of a Hawker 125700. According to medical director of Netcare 911,Dr Glenn Staples, the brand new executive jetaircraft, which was acquired at a cost ofUS$2million, has a substantially longer range, higherairspeed and considerably more space, which willenable the provider to further enhance its servicelevels to clients throughout sub-Saharan Africa.Commenting on the latest addition to the NetcareAeromedical Division’s fleet, Business DevelopmentManager, Serge Avice du Buisson said that the new

aircraft would have to stop onlyonce to re-fuel while travelling todestinations such as Nigeria andGhana, Chad, Sudan, Ethiopiaand Eritrea: “With the newHawker 125 700 we are able tooffer 24-hour cover throughoutthe African continent whilesubstantially enhancing ouroperational and cost efficiencies.”He went on to describe theadvantages of the new Hawkerexplaining that it has an auxiliarypower unit to assist in keepingequipment fully charged on theground, while allowing for the airconditioning to keep running.The additional space that itprovides also allows room fortwo patients and, if needed, up

to five emergency crew. Its best feature is thesingle-point re-fuelling system that reduces re-fuelling time from 45 to only 20 minutes. Inaddition, if required, the Hawker has the ability andthe equipment on board to fly to Europe, accordingto Avice du Buisson.The Netcare Aeromedical Division, which providesair ambulance evacuation services throughout Africa,also has a further two dedicated fixed-wing airambulances based in Johannesburg, with additionalstandby aircraft available for busy periods or tomaintain a consistent service during maintenance onthe dedicated aircraft.

AirMed Hawaii getsgo-ahead

The State Health Planning and DevelopmentAgency (SHPDA) in Hawaii has approved anemergency certificate of need for AirMed Hawaii tooperate an air ambulance statewide. None of theother applicants for this certificate were granted thislicense.David Sakamoto, SHPDA administrator, saidAirMed’s application was approved because it wasthe only company that could have a plane ready toservice the islands within a couple of days of thecertificate being granted. The need for additional airambulance services in the area was increased whenHawaii Air Ambulance grounded its fleet afterMarch’s tragic accident. AirMed will now compete with long-time providerHAA for service on the islands. Maui emergencyroom physicians have reportedly urged SHPDA toallow yet another air ambulance provider into thestate as soon as possible to further improve currentdelays in transporting patients.

Missions highlightsustained needIn New Zealand, the Wellington-based Westpacrescue helicopter and the Life Flight NZ fixed wingair ambulance were kept busy recently, highlightingtheir importance at the latter company’s open day,which was attended by 2,000 people at Wellingtonairport. The day was organised to raise awarenessof the essential work carried out by the aircraft andto raise funds for Westpac’s chopper appeal.Life Flight general manager Kevin Allan said theopen day and national funds appeal were morespecial this year because the organization wascelebrating the 30th anniversary of its founding byPeter Button, and 25 years of Westpac sponsorshipof the rescue helicopter service.


AIR AMBULANCENEWS20

Around the world and across frontiers, military,police and coastguard services traditionallyprovide a major part of the medical andemergency rescue infrastructure. Robin Gauldieexamines the impact on the UK industry ofprivatising these operations

The recent case of a British yachtsman rescuedfrom his vessel in severe conditions off the Pacificcoast of Mexico by a US Navy helicopterillustrates the role of the military in rescueoperations. Like many yachties, the rescued manhad not insured himself or his boat, sopresumably the US taxpayer will be picking upthe tab.In the UK, it transpires that more than nine outof ten mercy missions flown by Royal Navy andRoyal Air Forcehelicopter crewsinvolve rescuingcivilians, not militarypersonnel. There is nocharge for the service,as the militaryhelicopters are kepton standby for militarysearch and rescue(SAR) services and arepaid for by themilitary. The UK’s SARteams airlift around 1,400 people to safetyevery year, operating from a dozen bases,ranging from Cornwall to the Shetland Isles inthe North Atlantic.Many of those rescued are local residents, but asignificant number are tourists. The UK has agrowing adventure and activity tourism sector,with activities ranging from hang-gliding andwindsurfing to scuba diving, mountain walkingand rock climbing.Now it is has been reported that the UKgovernment is planning to unify and privatise SARservices, partly due to the phasing out of a largefleet of elderly RAF and Navy Sea Kinghelicopters, which have been in operation since1977. The joint British/Italian Merlin will replacethe Sea King for military purposes, which is toobig and costly for civilian rescues.Two foreign helicopter operators – US-ownedBristow Helicopters, which is part of theOffshore Logistics group, and the Canadiancompany CHC Helicopters – are reported to befront-runners in the race for the £40-million-a-year contract.Whoever takes over will have to put in place afleet of up to 40 new rotorcraft, probably from

the Sikorsky or Puma stables, along withrecruiting crew and other personnel. Contractingthe service out to the private sector may makegood accounting sense, but it could spell trouble,which is why opposition parties and theadventure tourism sector are against the change.Understandably, people in the UK’s remotecommunities worry that a foreign, for-profitcompany will provide a weaker emergencyservice than the armed forces at a higher cost.That worry may be exaggerated.The British Marine and Coastguard Agency(MAC), which has been semi-privatised for sometime, has already renewed its contract with aCanadian helicopter company to provide SARservices for a further five years from 2007. TheMAC is the third component in the UK’s service

and its record sincebeing contracted outhas been exemplary.However, the tourismindustry and itspartners in theinsurance sector areright to worry. Theycurrently get to useone of the world’sbest SAR networksat little or nocharge, but

companies like Bristow do not rescuestranded hill walkers or foundering yachtsmenout of the goodness of their hearts. The costof such missions will be passed on to therescuees and to insurance companies.If that happens, it could encourage otherpublic-sector aeromedical service providers,such as air ambulance services run as charitiesin partnership with National Health Servicehospital trusts, to look at new ways of charginginsurance companies.Looking at it cynically, that could be good newsfor insurers, encouraging visitors to take outcover they might not otherwise have bought,or to opt for a higher level of emergency coverat a higher premium. However, the UK, for all its popularity, isalready perceived as one of the world’s mostexpensive destinations. Anything that adds tothe high cost will act as a further, unwelcomebrake on the slow development of thecountry’s tourism sector. The bottom line may look attractive to theMinistry of Defence’s accountants. Seen from theperspective of the tourism sector, it looks a gooddeal less so.

No more free rides

In the UK, nine out often mercy missions

flown by Royal Navy andRoyal Air Force

helicopter crews involverescuing civilians

Air ambulancedoubts for ScotlandA new contract for Scotland’s air ambulance servicehas led to an increasingly bitter war of words. Thenew £40-million contract awarded to Hampshire-based Gama Aviation was particularly controversialas it saw the end of a 37-year service provided byLoganair.The new set-up, implemented on 1 April, has leftthose in Orkney with what they believe to be apoorer service leading to strainedrelations. The Scottish AmbulanceService (SAS) and the OrkneyIslands Council have experiencedrepeated disagreements.According to the Islands’ Memberof the Scottish Parliament (MSP),the main concern is the loss of aKirkwall-based aircraft.Gama has replaced existing fixed-wing air ambulances based inGlasgow, Orkney and Shetland,and two helicopters fromGlasgow and Inverness with two helicoptersoperated from Glasgow and Inverness and twopurpose-built fixed-wing aircraft from Aberdeen andGlasgow. These will be supported by a medically-fitted search and rescue helicopter in Shetland. TheSAS has dismissed claims that the fixed-wing aircraftbased in Orkney and Shetland can respond quickerto island emergencies, stating that the newarrangements will be faster, more reliable and morecomfortable for patients. With the new aircraftpurpose-built as air ambulances they are said to befaster by an average of 15 minutes.The council wants the Islander aircraft to beretained as a back-up so that a locally-based airambulance is available in circumstances where thehelicopter can’t get to Orkney. The SAS says ittakes concerns of the Islanders very seriously andtalks continue.

Air Evac Lifeteamdonates $10,000Air Evac Lifeteam, a rural-based air ambulanceprovider based in Missouri in the US, has donated$10,000 to the foundation for Air Medical Researchand Education (FARE) for research on disasterpreparedness and air medical response to naturaldisasters. The donation was presented at theAssociation of Air Medical Services (AAMS) SpringConference in Washington, DC.

In making the donation,Air Evac Lifeteam VicePresident of Operations,Seth Myers, said it is theAir Evac Lifeteam’s hopethat the money will beused to help promotemore awareness aboutthe role civilian airmedical providers canplay in natural disasters,such as HurricaneKatrina, as well as

establish a plan for deployment of such services.Commenting on both Katrina and Rita, Myerscontinued: “Without the response of the private airmedical community to this disaster, we can onlyimagine how many more lives would have beenlost. At the same time I think the disasterdemonstrated the need for us to work with stateand federal emergency agencies and the military toput a coordinated plan in place for future disasters.” FARE chairman Dr Kevin Hutton wasunderstandably complimentary about this donationfrom Air Evac and went on to stress theimportance of this initiative for the future: “Inproviding this donation to support research indisaster preparedness and planning, Air Evachopes that other members of our community willdemonstrate their support for our community bydonating to FARE.”

The Air Evac Lifeteammakes its donation


AIR AMBULANCENEWS 21

New jet flies intoaction for Medic’AirThe Medic’Air International team was able tosuccessfully put its new Learjet 45 into actionrecently. This new addition to the fleet, which wascarrying a medical doctor and registered nurse,successfully completed the medical evacuation of aneurological accident from Casablanca to Paris on24 March.With a range of 3,760 km (2,336 miles) andequipped with a Lifeport Stretcher, the new plane isbased in Paris Le Bourget Airport and complementsthe Falcon (F10, F20-5, F50) and Learjet (Lear 35and 55) fleet already used by Medic’Air forintercontinental flights from Paris.

FAI flies ahead aftersuccessful year

For Flight Ambulance International (FAI), 2005ended with a medically challenging mission. NewYear’s Eve saw the evacuation of a severely injuredchild from Dakar, Senegal to Paris, making it theirmost successful year to date.As a team, the fleet of four fully intensive care-equipped air ambulance aircraft – all strategicallybased in Nuremberg, central Europe – carried out487 patient transports for a total of 4,400 flyinghours. When compared to the 2004 total of 263 airambulance missions, this represents an increase ofabout 85 per cent. Adding the non-air ambulanceflights, plus the operation of a Learjet 35 dedicatedto the UN peacekeeping forces in Abidjan, IvoryCoast, the full total amounts to more than 5,500hours. One development of particular interest in 2005 isthe concept of wing-to-wing transfers for longroutes, which translated into no less than ninemissions in the last quarter of 2005 – all featuringcooperation between FAI and its partners. This isespecially relevant as a cost-efficient resource-optimising solution for long stretches between theMiddle East and the Far East or southern Africa andEurope and onwards to North America says thecompany.This year looks set to be as successful, starting outwith a mission from Karachi to Los Angeles, whichwas performed as wing-to-wing between FAI and aCanadian operator in the second week of January. The extension of the UN peacekeeping mission onthe Ivory Coast has made a change of plane typemandatory. The D-CFAI Learjet 35A was replacedby the D-CATL Learjet 55. The remaining fleet ofplanes stationed at the Nuremberg airport for thetime being consists of two Learjets 35A, oneCitation II and one Citation I. An eventual increaseor remodelling of the fleet as a result of this changewill be analysed considering market requirementsand several scenarios will be evaluated. In themeantime, arrangements have been made tofacilitate the use by FAI of another Nuremberg-based Learjet 55 for missions requiring this type ofaircraft. Another development worth noting was thetremendous increase of double-stretcher transportscompared to the previous year, especially during thehigh season, due to the elimination by several well-known carriers of their stretcher capacity oncommercial flights. FAI plans to meet this marketrequirement during the 2006 high season bypermanently arranging one of its dedicated airambulance planes in a double stretcherconfiguration. To achieve this goal, the Learjet 35Awill be equipped in the tandem configurationalready used on the Citation II, where the twostretchers are positioned linearly, one behind theother. This optimises access to both patients for thepurpose of medical interventions, and allows FAI touse two doctors to facilitate the logistics of the in-and outbound patient transports.Besides the day-to-day air ambulance business, FAImade headway with other projects, such as thepurchase of Automatic External Defibrillators asadditional aircraft equipment for passenger flightsand the necessary training for the staff.

Ireland dashes ‘dangerous’ rulesInternational safety regulations surrounding thetransportation of patients by air were discussed inIreland recently, with Transport Minister MartinCullen confirming certain statutory details tointerested parties. He was answering a question inthe Irish parliament, raised by a doctor whoencountered difficulties when airlifting a patient.The patient was a heavily pregnant woman, whowas in advanced stages of labour and needed tobe taken from Clare Island, County Mayo, toMayo General Hospital. She was airlifted by an AirCorps helicopter at 4.45 AM, but she did notreach the hospital until 3.35PM the following day.The reason? Under civil aviation law, a helicopterwith two or more passengers can only land at an

airport, not a hospital. Mr Cullen confirmed thathelicopters carrying emergency cases could notland at some hospitals if the patient isaccompanied by a relative or other passenger.In this case highlighted by Dr Jerry Cowley, thewoman had to be taken to an airport and thentransferred by taxi to the hospital. Dr Cowley saidsuch regulations were unnecessary and dangerousin emergency situations.Meanwhile, Mr Cullen commented: “Thesesearch and rescue regulations are internationalsafety regulations which adhere to the highestemergency and safety standards and, as such, theIrish Aviation Authority is not in a position toamend them.”


NEWSANALYSIS22

As the world’s biggest insurer, with rapidlyexpanding financial and banking services, the NewYork-based AIG has the potential to seriously impactthe way travel insurance is designed and distributedworldwide.In the wake of AIG’s acquisition announcement,John Noel, CEO of Travel Guard, noted that thedeal would allow Travel Guard products andservices to be exposed to clients wherever AIGdoes business, which is currently in 134 countries.Though AIG has previously offered various traveland expatriate insurance products throughout itsdistribution chain, such as through AIG Europe’sarrangement with eBookers, the formulating andpackaging of a specific brand, recognised until nowonly in the US, will very likely stiffen competition inmarkets such as the UK and Europe, whereentrenched giants such as AXA (the second largestinsurance company in the world), MondialAssistance, RBS, and Mapfre, are household names.A change in this situation will be further enhanced by

AIG’s recently signed contract with the UK’sinternationally acclaimed football team ManchesterUnited. The deal, the country’s largest of its kind,sees AIG become sponsors of the team’s footballshirts at the end of this season in an agreement thatis worth £56.5 million over four years.AXA, through its subsidiaries, provides travelproducts primarily in Western Europe, NorthAmerica, the Asia Pacific Region, the Middle East andAfrica. In the UK it remains the leading travel insurer,with RBS biting at its heels. But the UK market is sodiverse, with so many different players, that evenAXA, though the leader, can only claim a marketshare of 17 per cent in 2004, according to theresearch firm Datamonitor.

They might be giantsMondiale Assistance Group, which claims to havesold three million travel insurance contracts in 2005at a value of over €100 million, and which alsoclaims to be ‘the international leader in assistance

and travel insurance’ has a major presence in 28countries, with an exposure to 250 million peopleworldwide, mainly through its three internationalbrands; ELVIA, Mondial Assistance and WorldAccess.Spain-based Corporacion Mapfre, established in1933 as an insurer for injured workers, is thatcountry’s largest insurance company, and it hasoperations in about 40 other nations; in Europe, theMiddle East, Africaand Central andSouth America. Asthe current leader oftravel insurancevolume in LatinAmerica, Mapfreboasts 20 millioncustomers in 34countries andrevenues of €7billion in 2004. Interestingly, shortlyafter AIG announcedits acquisition ofTravel Guard, one of the next largest insurers in theworld, the Netherlands-based ING (through INGCanada) announced that it had acquired the GreyPower Insurance Brokers in Canada, one of themajor distributors of travel insurance in that country.The message left is that insurance production anddistribution is rapidly becoming consolidated amongthe biggest and richest financial organisations. But in

trying to break into the European travel insurancemarket, AIG will find formidable and highlydiversified foes competing over a lucrative pot.Finaccord, an independent market research firm thatanalyses financial services in the UK and Europe,appraised the European travel insurance andassistance market at €2.5 billion in 2002 (not abooming year for international travel).In characterising travel markets, Finaccord noted that

over 217 millionoverseas trips wouldbe made byEuropean residentsthrough 2006, thattravel within theEuropean Uniondominates theoverseas market inEurope (with holidaytrips outnumberingbusiness trips bynearly six to one),and that Germanyand the UK

accounted for 71 per cent of the total trips outsidesof the EU. It also noted that the French remainedwedded to Francophone countries and the highestpercentage of their visits abroad were to Africanterritories, while Italians were less inclined to travelabroad than their northern European neighbours.Furthermore, with a trend for shorter, morefrequent trips characterising the travel marketplace,

AIG’s acquisition of Travel Guard International, America’s leading

seller of travel insurance products, has catapulted the US-based

financial behemoth into centre stage of a growing and increasingly

competitive global travel insurance market, until now dominated by

UK and European-based companies. Milan Korcok investigates

Only giants need apply

and with the continued proliferation of discount aircarriers such as Ryanair and easyJet boostingpassenger numbers, there will be no paucity ofcustomers to court for any insurers. Online travelagents, such as eBookers, Expedia andlastminute.com, are also expected to play a majorrole in diversifying travel insurance distributionchannels.

Fickle consumersWhat is shaping up, says Finaccord, is a Pan-European market, with customers switching fromone product to another as new products, services,and ease of purchase, become more diversified.There will also be growing pressure from paymentand credit cards that are expanding their travelcoverage – a serious potential threat to themainstream travel insurance sector.Though mostanalysts agreethat travelinsurance willalways be alow marginproduct, thegrowthpotentialscontinue toexcite. Theresearch organisation Datamonitor notes that in2004 visits abroad by UK residents grew at theirfastest rate since 2000, with North Americaregaining some of its popularity. In Germany, whereTUI Deutschland, Thomas Cook, and Rewe-Touristik dominate the tour operator segment of themarket, there appear to be signs of resurgence froma sluggish economy and Finaccord predicts somerobust growth through 2006.Compared to the dominance of the Pan-Europeanmarket and the abundance and diversity of travelinsurance products available to Europeans, added totheir propensity to buy travel insurance, thepenetration of travel insurers into the potential USmarket has been puny.According to the US Travel Insurance Association (anorganisation representing travel insurers andassistance groups), Americans spent more than $1billion on travel insurance last year, with over 17million people purchasing travel insurance policies.

Out of apopulation of 289million, that’s adrop in thebucket, comparedto, say, theNetherlands,where 85 percent of Dutchresidents take outinsurance whentravelling abroad,and where thereare some 40underwriterscompeting forbusiness in theDutch travel

insurance market. In Canada too,approximately 80 per cent oftravellers abroad buy travelinsurance – either in single trip orannual policies. And in Canada –where AIG intends to stake out ahigher presence – travel insurancehas gravitated relentlessly to largerand larger financial servicescompanies and insurers, such asManulife, ING, RBC (Royal Bank)and Allianz, since 1990.

China crisisBy parachuting into this internationalmarket, AIG’s Travel Guard hasclearly gone from famine to feast –if it can keep itself from being

devoured bymanifold, toughcompetitors. Butwith its globalreach, AIG looksnot only toEurope, but alsobeyond. And oneof its most prizedtargets is China,where it envisions

a significant penetration into thebroader health insurance market –as does one of its chief competitors,Toronto-based Manulife FinancialCorporation.According to the Bloombergfinancial news service: “Overseasinsurers, including AIG and Manulifeare vying for customers in China,where 90 per cent of the 1.3 billionpeople lack healthcare coverage.”John Wong, Boston ConsultingGroup Inc.’s Asia chairman, predictsthe private health insurance marketwill swell to $56 billion by 2020.And it doesn’t take an experiencedanalyst of the travel insuranceportion of this market to also notethe growing masses of middle-classChinese tourists congregating dailyat the gates of Buckingham Palaceor in the sacred confines of theSistine Chapel. “We see double digit growth in theChina health business,” BarryStowe, the Hong Kong head of AIG’s globe accidentand health unit told Bloomberg.AIG already has 1.5 million health insurancecustomers in China, who paid $100 million inpremiums in 2004. That is only about one per centof the company’s global accident and healthbusiness, said Stowe. But to succeed in China, foreign companies will faceentrenched rivals. For example, the Beijing-basedChina Life Insurance Company and Shenzhen-basedPing An Insurance Group – the two largest – controlmore than 90 per cent of the overall market. Andwhere AIG had 23,000 sales agents in June 2005,

China Life had 663,000.Bloomberg notes that since China let non-Chineseinsurers operate nationwide rather than only inselected cities, the foreign presence of insurers hasgrown. Copenhagen-based International HealthInsurance Danmark A/S is at present awaitinglicensing and expects the country to become itsbiggest health insurance market in Asia within adecade (Hong Kong is already its biggest Asianmarket). And International Health, a unit of London-based British United Provident Association (BUPA)has been reportedly in talks with Ping An Insuranceto form a venture.

For AIG, which recently announced a $1.64-billionsettlement with the US Department of Justice, theSecurities and Exchange Commission and AttorneyGeneral Eliot Spitzer, in respect to its part in therecent bid-rigging scandal, travel insurance is but aspeck in its eye. And there are still dozens of relatedlitigations it has to look forward to – or not. Butjudging by investor confidence in the company’sturnaround, and by its own assiduous determinationto regain whatever ground it may have lost since theSpitzer attacks, insurers already entrenched in thetravel insurance business worldwide might well be infor an invigorating joust.


NEWSANALYSIS 23

AIG already has 1.5 millionhealth insurance

customers in China, whopaid $100 million inpremiums in 2004


WORLDMARKETS24

Anyone familiar with the Baltic States during theSoviet era cannot fail but be struck by the dramaticdifference today and the advances have beenparticularly dramatic since accession to EuropeanUnion (EU) membership.Where motorists once re-filled their tanks frombowsers parked at the roadside, today there aresmart new self-service filling stations. Where oncethere were hotels that often deserved a minus-starrating, now there are accommodations that matchwestern standards. And, most importantly of all, thepopulation has become mobile, with more than fivemillion people from the Baltics now spending a nightor more in another country each year.Neighbouring Poland is the most popular destinationfor Lithuanians and Latvians, but increasing numbersare venturing to such sunshine destinations as Spainand there is a rapidly growing package-holidayindustry. Low-cost airlines are also having a strongimpact, while the average length of stay abroad isnow some 7.2 bed nights per traveller.

Free marketsIncreased support for tourism has come frominbound funding and common immigration policiesfor the region, along with the change from theplanned economies of Soviet times to the freemarkets of the EU. The insurance industry has grown and diversifiedtoo, even though, like outbound tourism, it is still inthe infancy of its development. In Lithuania, largestof the republics, for instance, gross insurancepremiums – over 80 per cent of which are for non-life policies – account for just one per cent of GDP,or a mere US$30 per head per annum, while inLatvia it accounts for two per cent of GDP.Lithuania currently has 22 insurance companiesunderwriting non-life risks and the leading three ofthese account for around 60 per cent of premiumsearned. The introduction of compulsory motorinsurance in 2002 gave the industry a new injectionof business and today, with more people than everon the move, whether for business or leisure, travelinsurance is experiencing similar strong growth.The industry has rapidly fallen in line with IAUS coreprinciples and EU requirements, thanks to effectiveregulation and supervision passed into law by theLithuanian parliament. Balta, largest of the Latvianinsurance companies, pulled in gross premiums of27,5666,843 LVL (£27,822.561) in 2004, a five percent increase over the previous year, while claimspayments were 11,436,574 LVL (£11.459,690), afour per cent decrease.Companies like BTA, Balva, Ergo Latvija, ParekssApdro and Baltikums have been posting similarlyencouraging figures. Total non-life gross premiumrevenue for the entire Latvian insurance industry in2004 (the last year for which full figures areavailable) was 120,153,916 LVL (£120,396,772 –the exchange rate being close to one for one).Founded in August 2003 by joint stock companiesregistered in the Republic of Latvia, the LatvianInsurers Association (LIA) represents some 17insurance companies – 11 non-life and six life

assurance providers – who between themrepresent some 98 per cent of the total Latvianinsurance market. LIA is a member of the EuropeanInsurance and Reinsurance Federation (ComitéEuropéen des Assurances) – the CEA – which unites32 national member associations and their 5,000

member insurance companies.Overall, Lithuania’s GNP is growing at an impressive7.8 per cent a year, while Latvia’s is 8.5 per cent –both among the highest figures in all Europe. Latvia’sinflation rate is 6.2 per cent, while unemploymentstands at 8.5 per cent, a figure that has been close

to static for the past two years. As members of theEU, both countries aspire to adoption of the euro,with 1 January 2008 being the date set for Lithuania.

Never mind the BalticsWith its elegant capital city of Riga – oftimes called‘The Paris of the Baltics’ – Latvia is a majorcontributor to the regional economy. It covers some64,589 square kilometres and shares borders with

Belarus, Estonia, Lithuania and Russia, as well ashaving some 531 kilometres of Baltic coastline. Rigais, with a population of nearly 800,000, the largestcity in the Baltic Republics. It is renowned for itsbroad boulevards, beautiful art nouveau architectureand truly cosmopolitan flavour. A major attraction isthe vast indoor market now housed in what wereonce Zeppelin sheds.Having been formerly ruled by Tsarist Russia, thecountry enjoyed a short spell of self-rule betweenthe two World Wars, having declared itsindependence from the newly created USSR on 18November 1918. It was forcibly re-annexed to theUSSR in 1940, invaded and occupied by theGermans and re-integrated into the Soviet Uniononce more when the Nazi forces were driven out.Independence was declared anew on 4 May 1990,with the Soviet break-up, and became a de-factoreality on 21 August 1991. The last Russian troopsleft Latvian territory three years later but a largeRussian minority – accounting for around a third ofthe population – remains in the country today.There are also Belarussian, Ukranian, Polish andLithuanian minority groups, between themaccounting for 10.7 per cent of the total population.A land of low-lying fertile plains, largely needingdrainage rather than irrigation, Latvia has a range oflow hills in its east. It is home to nearly three millionpeople, with a median age of 39.4 years, and,thanks largely to emigration into other EU countriessince accession, currently has a negative populationgrowth rate of minus 0.67 per cent. Educationstandards are high and literacy stands at animpressive 99.8 per cent.The 1998 Russian financial crisis had a damaging

Roger St. Pierre takes a close look at the emergingBaltic states of Latvia and Lithuania

The east faces west

Increased support fortourism has come frominbound funding andcommon immigrationpolicies for the region,along with the change

from the plannedeconomies of Soviet

times to the free markets of the EU

effect on Latvia’s then emerging transitionaleconomy, but close governmental budgetarycontrols and a re-orientation of exports from aneastern to a western direction overcame the arisingproblems. Most industrial enterprises, banks andfinancial institutions and the real estate market weresuccessfully privatised – though the state still holdsequity in somekey areas.Revenuecollection hasbecome moreeffective, helpingto lessen the onceworrying budgetdeficit. The WorldTradeOrganisation wasjoined in Februaryof 1999 and Latviaacceded to EUmembership inMay 2004. Thecountry is alsonow a member ofNATO.Close to 70 per cent of the 1.11 million workforceis employed in the services sector, with 26 per centin industry and 4.1 per cent working on the land.Dependent on imports for its raw materials andenergy requirements, Latvia’s main products includebuses and commercial vehicles, tram and railroad

cars, agricultural machinery, fertilisers, textiles andprocessed foods. The main agricultural products aregrain, potatoes, sugar beet, beef, pork, milk andeggs.The UK (12.8 per cent) is surprisingly today’s mostimportant trading partner, followed by Sweden (10per cent), Lithuania (9.1 per cent), Estonia (eight per

cent) andRussia (whichhas slippedback to 6.4per cent). Onthe otherhand, the UKdoes notfigure amongthe nation’stop eightsuppliers –that list beingtopped byGermany(13.9 percent),followed by

Lithuania (12.2 per cent) and Russia (8.7 per cent).External debt stands at US$13.3 billion while thecountry is in receipt of US$96.2 million per year ineconomic aid.As wireless telephony expands, there now beingclose on two-million cellphone subscribers, the useof fixed lines – and there are currently some

630,000 of these – isin decline. Latvia hassome 55,000Internet hosts and850,000 Internetusers. The countryhas 2,303 kilometresof railways and69,919 km of pavedroads, as well as 23airports with pavedrunways and 300 kmof commercialwaterways. Thereare major ports andoil terminals at Rigaand Ventspils.

Boom and bustThanks to waves ofmigration and theinfluence of strongsurrounding nationslike Russia, Germany,Poland and, justacross the Baltic Sea,Sweden, Latvia andLithuania have hadchequered histories.They stood on amajor Viking traderoute and Rigabecame a prosperousmember of theHanseatic League ofgreat trading cities aswell as playing amajor role in theProtestantReformation.Teutonic knights heldgreat power, while

the 17th and 18th Centurywars for dominance, whichpitted Poland, Sweden andRussia against each other,put the region to thesword and flame inbetween periods of greatprosperity. In 1795, all ofwhat is now Latvia becamepart of Imperial Russia.With the Russianstemporarily gone, the inter-war period saw Latvia dowell, with per capita GNPapproaching that of Finlandbut the Great Depressionbit deeply and the growingstorm clouds of World WarTwo saw 25,000 Russiantroops moved onto Latvianterritory as an outcome ofthe infamous Molotov-Ribbentrop Pact.Since the end of Soviet overlordship, rathercontroversial language and citizenship laws havelargely sidelined those of Russian descent, causingconsiderable problems. Today close on 19 per cent

of the country’s inhabitantsremain non-citizens. Mostcitizens though appreciatethe benefits thatmembership of the EU,which was voted for by 69per cent of the voters in anational referendum, hasbrought and no longer lookeast for protection andsalvation. Though Latvia hasjust about the loweststandard of living of allcurrent member states inthe community, theeconomy has one ofEurope’s highest growthrates.Like Latvia, Lithuania, whichhad also been independentbetween the two WorldWars, was annexed by the

Soviet Union in 1940. Then, in the momentousevents which led to the break-up of the USSR,Lithuania became, on 11 March 1990, the first ofthe Soviet republics to declare its independence –though the powers that be in Moscow refused to


WORLDMARKETS 25

Thanks to EU convergence,setting up business in both Latvia

and Lithuania is today muchsimpler and previous problems

with the banking system seem tohave been overcome in two

countries doggedly determined tobecome part of the European

business and cultural mainstream

recognise the proclamation untilthe abortive coup against MikhailGorbachev, which left them withmore than enough problems todeal with at home.As soon as the last Russian troopsleft in 1993, the new state girdeditself for integration back into theorbit of Western Europe, joiningboth the EU and NATO in early2004. Set between Poland, Latvia,Belarus and the Russian enclave ofKaliningrad and with just 99kilometres of coastline, Lithuaniahas a total 65,200 squarekilometres of territory.Another low-lying country, likeLatvia it has a relatively mildclimate with damp, moderatewinters and warm summers. InJuly 2006, the population stood at

an estimated 3,585,906. Median age is 38.2 years,with a negative population growth rate of minus 0.3per cent.In a country that, like next-door Poland, isoverwhelmingly Roman Catholic, there is no greatproblem with minorities as 83.4 per cent of thepopulation is ethnic Lithuanian, while Poles andRussians account for 6.7 per cent and 6.3 per cent ofthe population respectively. Both these groupingsretain their own language and literacy overall standsat 99.6 per cent.Traditionally strongly orientated towards Russia in itstrading relations, Lithuania has been successful inadopting a western outlook. The large formerlystate-owned utilities have mainly been privatised,along with 80 per cent of all enterprises. In the twoyears between 2003 and 2005 unemploymentdropped from 11 per cent to an impressive 5.3 percent, while inflation is a modest 2.6 per cent –figures which look good against those appertaining in

much of Europe, especially in Germany and France.There is also a real GDP growth rate of 6.7 per centand per capita GDP now stands at US$13,900 andrising.Of the 1.62 million workforce, more than 60 percent are now engaged in the service sector, whileagriculture, 20 per cent not so long ago, andindustry, formerly 30 per cent, are in continueddecline. Major exports include mineral products,clothing and textiles, machinery and chemicals.Russia, at a whopping 23.1 per cent, remains themajor export partner, followed by Germany on 16.7per cent and Poland, 7.7 per cent. Germany (10.2per cent) is the main export partner, followed byLatvia (10.2 per cent) and Russia (9.3 per cent).A previously inefficient telephone service is beingrapidly upgraded, with the installation of a nationalfibre-optic trunk network rapidly approachingcompletion. As everywhere, mobile usage isincreasing rapidly and now serves 3.5 million users.Just on 136,346 hosts serve a million Internet users.There are 1,998 kilometres of railways and 33airports with paved runways, while the 78,893kilometres of roads includes some 417 kilometres ofmotorway.Thanks to EU convergence, setting up business inboth Latvia and Lithuania is today much simpler andprevious problems with the banking system – therewere accusations of money laundering and otherirregularities – seem to have been overcome in twocountries that are doggedly determined to becomepart of the European business and culturalmainstream.With increasing numbers of both Latvians andLithuanians today working in other communitycountries and relatives wishing to travel to see themas well as to do business and take holidays abroad,the demand for travel insurance is exponential withthat for travel tickets. These are small markets, butbuoyant and growing ones that promise worthwhilerewards for underwriters.


WORLDMARKETS26

Lithuania currently has 22 insurancecompanies underwriting non-life risks and

the leading three of these account foraround 60 per cent of premiums earned


DICK’SHOTLINE / HOTSPOTS 27

Rental car complaints are up again because ofstringent new rules enacted by Hertz, the world’slargest auto rental agency. Hertz rental contractsnow make the customer liable for virtually allunexplained damage, as well as damages fromnatural disasters – from hurricanes to hailstones.Other major car rental companies may soon followsuit. It was just this new provision that resulted in acall to the hotline from an upset traveller.The caller complained that he had not beeninformed of the new provision that made himresponsible for all damage to his rental vehicle, buthis potential liability was clearly described in the textof the rental contract. Our caller had returned thecar to the agency’s lot after closing hours. The nextday, a rental agency employee reported that he

discovered significant damage to the car, which therenter insisted was not there when he dropped itoff. While our caller appears to be contractuallyliable to the rental agency, we directed him to lookfor other insurance that may be available to coverthe $1,500 charge Hertz placed on his credit card.We also directed him to contact his credit cardcompany and dispute the charge.In another call taken on behalf of a travel insurancecompany, we learned of a large-scale scam involvinga UK car rental agency. Over a six-month periodthe agency claimed damage to many of the carsreturned to their lot after closing hours. Theseallegedly fake damage claims were in excess of£100,000 by the time that the fraudulent schemewas discovered. We convinced UK lawenforcement to launch an investigation, which is stillpending. The policy of making the renter liable forall unexplained damage to cars left at the agencyafter closing, creates an opportunity for fake orexaggerated damage claims by unscrupulous rentalagencies.A truly unique auto rental claim scenario recentlycame to our attention. A couple on holiday inBelize rented an SUV from an AVIS agency. Thecouple followed the directions given to them by anemployee of their eco-resort. These directionsspecifically recommended taking a short cut across a

shallow stream. Unfortunately, the vehicle becamebogged down midstream. The couple left the carthere with most of their possessions still in the trunk(boot) and hitchhiked to the nearest town. Whenthey got to town, they were informed that a towingservice was not available until the next morning, sothey spent the night there. The next morning, theyreturned with a tow truck to discover their vehicleand possessions had been destroyed by fire. Theremnants were still smoldering.Their car rental supplemental insurance carrierdenied coverage, based on the provision in thepolicy that prohibited driving in or through anybody of water. Avis then charged the value of thevehicle (claimed to be worth $21,000 US) to thecouple’s credit card only a few hours after I had

advised them toimmediately cancelthat card. Theirshort delay in actingon my advicesaddled them with alarge debt. After amonth ofdiscussions with thecredit cardcompany, thecharge wasreversed. Avis thenfiled a lawsuitagainst the couple intheir hometown,and werecommended alocal lawyer torepresent them.The case wasultimately settled tothe couple’ssatisfaction.

Our hotline calls sometimes reveal newly emergingsophisticated scams. Several recent calls showedthat criminals had accessed computer data involvingcredit card numbers, the identity of cardholders,and their ‘pin’ numbers. With this information,criminals can withdraw cash from ATM machinesanywhere. Eastern European locations happened tobe involved in two of our cases. Cardholders onlydiscover these cash withdrawals when theychecked their monthly credit card bills. This type ofscam can happen to people at home or while theyare travelling. The situation can become particularlysevere when a cardholder’s travel plans cause adelay in seeing their credit card statement anddiscovering the fraudulent withdrawals.So far, when we have referred the victims of thesescams back to their credit card companies,satisfactory credits were made. However, in thesematters, credit card companies will disclaim allliability if they are not informed of fraudulent activitywithin 90 days of the transaction. Fortunately, ourcallers have acted in a timely manner and sufferedno losses.Problems can arise while travelling for holiday orbusiness. Callers often feel more comfortable talkingto a lawyer, even though their own insurancecompany or credit card company may ultimatelyprovide the solution to their problem.

Dramatic emergency calls make for interesting reading,

so these are the cases most often described in this

hotline. However, every few months, we describe our

routine calls, particularly when they reveal emerging

trends. Dick Atkins divulges more from his hotlineMexico: A cultureof corruptionIn 2000, Vicente Fox, of the Partido de AccionNacional (PAN) political party, won Mexico’spresidential election and ended 72 years ofPartido Revolucionario Institucional (PRI) rule. iJetIntelligent Risk Systems take a look at whathappened next

One of Vicente Fox’s main campaign promises wasto significantly transform the country – hespecifically promised to combat entrenchedcorruption. Six years later, it is clear that Fox hashad limited success.A well-publicised anti-corruption campaign has hadonly superficial affects on the nationwide culture ofcorruption – Mexico continues to be an openlycorrupt society. During Fox’s presidency, theMexican congress has passed some anti-corruptionlaws, improving stock market transaction andbankruptcy laws. Beyondthat, Fox has been unableto advance structuralreforms to address theroots of corruption. He hasnot reformed thenotoriously corrupt judicialsystem, the tax system, theenergy sector or theeducation system.Accurately quantifyingcorruption in Mexico isextremely difficult. Thewatchdog groupTransparency Internationalgave Mexico a corruptionranking of 65 in its 2005listing of 158 nations(higher numbers signifygreater corruption). Thegroup also gave Panama and Peru rankings of 65;the US received a ranking of 17 in that report. Mostanalysts agree that corruption affects almost all areasof business in Mexico. Corruption of the judicialsystem, government officials and security forces aremajor challenges for multinational firms.Bribes and corruption are especially common indealings with the government. Corruptionaccusations have also recently implicated Fox’sfamily. Congress is currently investigating MartaSahagun, Mexico’s first lady, and Manuel, Fernandoand Jorge Bribiesca, her sons from a previousmarriage, for corruption. Sahagun and her sons arepartners of the Conductores MexicanosEspecializados Company, which is currently underinvestigation for unfairly receiving benefits andgovernment contracts during the Foxadministration.The security situation, which is directly linked tocorruption, has deteriorated during Fox’sadministration. The Citizens Council for PublicSafety and Penal Justice, a Mexican civicorganisation, claimed last summer that 194 peoplewere kidnapped in Mexico during the first three

months of 2005. These numbers are unconfirmed,but many experts agree that Mexico has thesecond-highest annual abduction total in the world,behind Colombia. Ransom kidnappings and expresskidnappings are especially common in Mexico’smajor cities and their suburbs, including Guadalajaraand Mexico City.Police corruption is also notoriously high in Mexico.Many multinational companies avoid reporting allbut the most serious crimes to the police,preferring instead to rely on private security details.Mexico’s police are known as the most corrupt inthe region and are involved in some kidnappingcases. They have also been implicated in andconvicted of murder, robbery, rape, cargo theft,drug trafficking and human rights abuses. Mexico’sFederal Investigation Agency (AFI), which Foxcreated in 2001, has made strides against

kidnapping-for-ransom and high-levelextortion and improved the image ofthe federal police. But the AFI has notbeen immune to corruption and hasbeen implicated in crime scandals. On5 February 2006, authorities confirmedthat four AFI agents were arrested onkidnapping and extortion charges.Security forces arrested the officersafter a Korean businessman accusedthem of trying to extort money andholding him against his will.In December 2005, the attorneygeneral’s office also said that it wasinvestigating almost 1,500 AFI officersfor corruption and other crimes.Authorities also said that more than450 of these AFI agents are facingprosecution for crimes, includingkidnapping. The actual investigation of

police officers is a positive sign because it showsthat the Fox administration really is trying tocombat corruption inside the security forces.Moving goods to and from Mexico has alsobecome a major challenge for multinationalcompanies due to corruption and bureaucracy;and this negatively impacts production. The USDepartment of Commerce in 2005 criticisedMexico for tainted customs administrationprocedures: “Including insufficient priornotification of procedural changes, inconsistentinterpretation of regulatory requirements atdifferent border posts, and uneven enforcementof Mexican standards and labelling rules.”Inspection and clearance procedures for someagricultural goods, the department said ‘are long,burdensome, non-transparent and unreliable’. Inaddition, cargo theft is a major problem formultinational manufacturing and retail companies inMexico. Multinational companies are forced tospend a significant portion of their revenue inMexico on security to protect their trucks,manufacturing plants, office buildings andemployees.

Travel hassles

iJET Intelligent Risk Systems (www.ijet.com), the travel risk management company, providesreal-time travel intelligence information through its award-winning Worldcue (copyright)technology platform for tracking and communicating with travellers. iJET services are backedby regional and category specialists from the fields of intelligence, security, travel, and healthwho staff an around-the-clock operations centre in Annapolis, MD.

Dick Atkins is chief counsel for International Recoveries, Philadelphia, which provides globallegal assistance to the travel insurance industry. He is in charge of International Recoveries’ legalhotline and has been involved in handling international legal incidents for the past 20 years. Hecan be reached via email on [email protected]

Vicente Fox

One reason for this trend is the increased cost ofhealthcare – healthcare cost inflation consistentlyand significantly outstrips general inflation as aresult of increasing ability to treat disease asmedical knowledge expands, increasing cost ofthose treatments and increasing expectations ofthe public, and the indication is that the trend willcontinue. Added to this, more people, and olderpeople, travel to potentially expensivedestinations (such as the US) than was previouslythe case, and even when they travel closer tohome within the EU, for example to Spain, theyoften find themselves in private sector clinicsincurring big bills. If we think about other forms of insurance wherethe health of the insured is the key issue – takelife insurance or private medical insurance forexample – insurers will always either exclude claimsrelating to pre-existing medical conditions or makean assessment of medical risk at point of sale andcome to an underwriting decision. Thus it’s nosurprise that the same process has come to beapplied to travel insurance. In fact, screening wouldpossibly have been applied systematically some timeago if it had not been for a few significant difficulties:• The low income per policy to insurers, leading todifficulty in justifying ‘traditional’ means of medicalrisk-rating (reliance on and interpretation ofinformation provided by doctors and so forth) withtheir inherent inevitable bureaucracy.• The fragmentation of the distribution network,with a large proportion of policy sales occurring intravel agency environments where anything thatwould make a policy (and potentially a holiday) salemore difficult was discouraged.So what changed? Screening is now pervasive withinthe travel insurance sector, and there are a number

of reasons for this.

The rise of the direct sellerDirect sellers compete largely on price. In order toget the best possible rates from underwriters theyneed to weed out sub-standard risks from theirbooks. To an extent it doesn’t matter to them if theycan’t sell a policy to a percentage of applicants, aslong as the policy can be priced in such a way as tobe attractive to the majority and not too many salesare lost as a result of an inability to sell because oflack of cover. Base rates become predicated on anincreasingly fit and healthy population. The result, ofcourse, is that those who can’t buy from the directseller are forced back to the travel agency/touroperator policy, which collects a greater proportionof bad risks and therefore becomes ever moreexpensive, losing market share, and completing thevicious circle. There have been some notablefailures of companies that have not addressed the

need to properly assess risks presented to them bytheir agency introducers.

RegulationTravel insurance in the UK is overseen by theFinancial Services Authority, whose key focus isfairness to the consumer. It is deemed, quitereasonably, that a consumer needs to be toldclearly at point of sale about the key facts relatingto their policy and, by extension, if the sectionscovering medical issues are to be, in effect,endorsed with ‘no cover’ decisions theconsumer needs to be clearly told about theconsequences. It has become clear that it is notsufficient to simply have a clause in the policydenying cover for claims related to pre-existingconditions without making an attempt tounderstand the applicant’s condition and specifywhat will and won’t be covered.Although the full impact of regulatory issues has

yet to be seen, it could be said that travel insurance,contrary to its poor relation image, leads the way in


The three key sections of cover

on a typical travel insurance

policy are medical

expenses/repatriation,

cancellation and baggage. Over

time, baggage has become

proportionately less important

in terms of percentage of

claims value, so now the lion’s

share of travel insurance

claims by value in the UK are

health-related. Paul Beven

analyses what this means for

the medical screening process

Why does screening happen?

Specialist products,designed to provide tailoredcover for substandard risks

will proliferate, and thisprocess will speed up asunderwriters learn how to

best underwrite theassociated risks and gainconfidence in the process


FEATURE28

compliance with some aspects of regulation, inparticular with respect to medical issues. Othersectors of the insurance market where health canbe a reason to deny claims – creditor for example –are only beginning to address these issues now.

Disability discriminationIt is still quite common to see clauses in policiesexcluding claims related to particular conditions(anxiety,depression, HIV).These clauses arepotentiallydiscriminatory asdefined under theDisabilityDiscrimination Act,because no attempthas been made toassess the risk of anindividual with oneof these problems(See Insurance andthe DDA feature,p.30). It is perfectlyacceptable to applyterms or conditionsto cover for claimsrelated to certainmedical conditions,but only after theyhave been properlyand fairly assessedaccording to therules laid down inthe Act.

TechnologyAdvances intechnology over thelast few years,particularly Internettechnology, have enabled medical risk-rating to bebrought to bear in a ubiquitous, much moreconsistent and more cost-effective way. This hasgone hand in hand with the increase in direct sellingand helped to make screening more widespreadinitially in call-centres and increasingly now directlyto the consumer over the Internet.

What exactly is screening?Medical risk rating is perhaps a better term. Theprocess can be said to have two aims:• Provide the insurer with an understanding of therisks presented by a particular applicant with aparticular travel plan, so that an informed view canbe taken on the underwriting decision.• To enable the applicant to be given a clearstatement of what level of cover, at what price, hecan be offered.In order to do this, the process generally works asfollows:• The medical warranty (the ‘trigger questionnaire’)is brought to the applicant’s attention.• If he needs to make a declaration of one or moremedical conditions he volunteers the(ir) name(s).

• A varying number of questions will be askedabout the detail of the condition, resulting in somesort of underwriting decision.• He may or may not be asked to pay additionalpremium, and the risk-rating process and outcomewill be recounted on the issued documentation.

How does the process fit in?This risk-rating process can either occur integral to

the policy sale, or ina separatetransaction. Theformer is probablypreferable wherepossible for anumber of reasons –customerperception, cost,additional premiumtake-up rates anddata collection beingsome. In either case,there are a largenumber of variationson the theme ofhow the screeningprocess dovetailswith the salesprocess and a largenumber of factorsthat will influence thisdecision. Technology,in particular theavailability of Webtechnology, is keyhere, and thoseorganisations withlegacy systemsincorporating oldtechnology are likelyto suffer.

Does screening work?Insurers will answer ‘Yes’ to this question, throughslightly gritted teeth. There is no doubt thatscreening substantially reduces numbers of claimsrelated to known, declared pre-existing diseases.For example, if an insurer has as their aim theavoidance of any claims related to pre-existingcardiac disease (such as angina, heart attack andcardiac failure) for travellers in the US, they canachieve this by clear trigger questions and the settingof an appropriate screening threshold for conditionacceptability. These claims savings more than offsetthe cost of the screening, especially when thetrigger questions are well thought through and thescreening is applied in a cost-effective way, forexample as part of a cohesive risk-managementstrategy. By moving thresholds up or down, insurers are ableto titrate the level of risk they are prepared toaccept for each piece of business they underwrite –screening is an underwriting tool along withwordings, levels of benefit, excesses and ratingmatrices. The reason for the gritted teeth is that,although screening works, it works for all insurers.

Competition remains just as fierce as it was, but inspite of increased medical costs, and with levels ofbenefit remaining pretty much the same, net rateshave hardly risen over the last ten years.

Crystal ball gazingMedical risk rating is here to stay. The combinedforces of defence against anti-selection and industryregulation will see to that. Risk-rating tools willbecome more sophisticated in their ability todetermine levels of risk, aided by useful claimsfeedback and the marriage of point-of-sale andclaims data. The use of risk rating as an underwritingtool will increase. Integration of screening and claimsmay be a push down the road towards directionalcare – ‘Yes we will cover your condition but only ifyou go to such-and-such a facility in the event of aproblem’.Separation of the policy sales process and screening

will become less common, and it will be the norm forpeople to answer health-related questions at point ofsale. Indeed, it will become commonplace for peopleto self-screen over the Internet. It is likely that we willsee a continuation of the trend for more and moreolder people with time (and money) on their hands,to spend longer and longer further away from home.A greater proportion of older, sicker people willtherefore be looking for travel insurance cover andwon’t be able to find it in ‘standard’ products.Specialist products, designed to provide tailored coverfor substandard risks will proliferate, and this processwill speed up as underwriters learn how to bestunderwrite the associated risks and gain confidence inthe process.The premiums charged may appear expensive butexpectations will become more realistic. The conceptof individualised, as opposed to one-size-fits-allpremiums will become much more commonplace.

www.travelscreen.co.uk


FEATURE 29

Minimising risk

maximising serviceOur screening process is not automated and

involves individual review by qualified nurses

Tel: 01702 587007

The Disability Discrimination Act (DDA) has been inplace for over 10 years, although different sectionshave come into force as law, at different stages overthe last decade. The Act only applies to GreatBritain, which are England, Scotland and Wales, asNorthern Ireland has its own Act.The DDA covers four main areas: what disabilitymeans; disabled people’s rights to employment;disabled people’s rights to access goods, facilities,services (including insurance) and premises; andtheir rights in regards to education. The DisabilityRights Commission (DRC) was set up in 2000 bythe British government, but is an independent bodywith three main functions:• Offering advice and information to disabledpeople and service providers, employers, educationestablishments and the general public. One of themain ways the DRC achieves this is through ahelpline. The DRC also promotes disabled people’srights through providing information about the DDAincluding the production of Codes of Practice andguidance.• Helping enforce the law through supportingcertain legal cases and providing advice to disabledpeople who believe they have been discriminatedagainst.

Insurance and the DDAHow has the Disability Discrimination Act in Great Britain affected theinsurance industry and what complaints has the Disability Rights Commissionreceived in response to the Act? The Commission’s Natalie Salmon analysesthe key areas of the debate


FEATURE30

• Lobbying parliament for change andimprovements to disabled people’s rights.

Changing timesDuring the DDA’s lifetime there have been manychanges to disabled people’s lives. In the case oftravelling, flights have become more accessiblefinancially. New European legislation will also meanthat there will be new rights for disabled peoplewhen they fly to and from European destinations.Two years from now airlines will have to treatdisabled people fairly and disabled people will havethe right to compensation if they are discriminatedagainst.Many holiday resorts, particularly in Europe andNorth America, are becoming more accessible in abid to attract the older tourist, who they realise mayhave an age-related disability and will expect to beable to stay somewhere that meets their needs.With these improvements either happening alreadyor on the horizon, more disabled people will betravelling and more often. Consequently, they willwant to take out travel insurance when they do so.

Insurance providersIt is important that the travel insurance industrydoes not become complacent about the servicethey offer disabled travellers. From the number andtype of calls we receive about travel insurance onthe DRC helpline, it appears that some disabledpeople are still encountering problems when tryingto secure travel insurance. The calls range fromcomplaints about insurance companies not providinginformation in accessible formats like large print todisabled people being turned down for travelinsurance due to blanket exclusions built intopolicies. Both of the above examples describepractices or policies that could be in breech of theDDA.The DDA affects insurance providers in Britain intwo ways: • There are duties under the Act for insurers asservice providers, which say that an insurer shouldnot treatdisabled peopleless favourablythan someoneelse because oftheir disability. • There is alsoanother sectionof the Act thatoutlines whenan insurer cantreat a disabledperson lessfavourably inrelation toinsurance only.As a serviceprovider aninsurer shouldnot treat adisabled personless favourablybecause of theirdisability and, ifneeded, thecompanyshould providereasonableadjustments totheir policies,practices andprocedures soa disabledperson canaccess them ina moreequitable way.For example, if an insurance company has a policythat they do not allow animals into their publicoffices this could be waved for assistance dogs.They should also provide auxiliary aids and servicesif needed, such as providing information in largeprint. This is particularly important when dealingwith documents like insurance policies, which areoften written in small print. These duties have beenin force since 1999, yet the DRC still receivescomplaints they are not being met.It is important to remember that these duties are

anticipatory and an insurancecompany should expect thatdisabled people would wantto use their services and beprepared to make theirservices accessible. Thisincludes all their services,such as public offices, phonelines, written materials andwebsites.The word ‘reasonable’ is usedwithin the Act because acompany is expected to act ina way that is reasonable for itwithin the law. What may bereasonable for a largemultinational company isgoing to be different to whata small business is expectedto do. However, many of theadjustments either costnothing or are low cost, so itis likely to be seen asreasonable for an insurancecompany to meet them.

Insurance obligationsIn certain circumstances aninsurer is able to treat adisabled person lessfavourably in relation toinsurance policies only ifcertain circumstances aremet, where they can offer a higher premium orrefuse to award a policy.An insurer can treat a disabled person lessfavourably if they can answer yes to all of thebelow:• It is in connection to providing insurance notservices.• It is based on information which is relevant to theassessment of the risk to be insured.• Information being used to form opinion is from a

source which itis reasonable torely on.• The lessfavourabletreatment isreasonabletaking intoaccount theinformationrelied on.• The Code ofPractice makes itclear thatassumptions andstereotypesshould not beused whenmaking decisionsand that theinformation usedto form anopinion shouldbe up to dateand reliable.One helplinecaller hadapplied for travelinsurance, buthad been turneddown becausethey haddeclared theyhad glaucoma,an eye conditionsuccessfullytreated with

drops. The majority of people with glaucoma havevery good vision, such as the Dutch internationaland Tottenham Hotspur footballer Edgar Davids. Itis vital that the information used when decisions arebeing made is accurate and up to date. Theinformation needs to be reviewed regularly toensure that the latest medical advances are notmissed and that it reflects societies changing attitudeto disability.The DRC is also aware that many people withmental health conditions find it difficult to acquire

travel insurance. It has been reported to thehelpline that some policies have blanket banson mental health conditions. This could be inbreech of the DDA and an insurancecompany could be challenged if they operatesuch blanket exclusion. Even bans that namemental health conditions individually, such asschizophrenia or bipolar, could be in breechof the DDA.It is important for insurers to deal with eachapplication for insurance individually and on its

www.itij.co.uk International Travel Insurance Journalwww.itij.co.uk International Travel Insurance Journal

FEATURE 31

Assumptions andstereotypes should not be

used when making decisionsand that the information usedto form an opinion should be

up to date and reliable

own merits. A person who has declaredthey have a mental health condition couldbe receiving successful treatment, whichmeans they are symptom free and so at amuch lower risk than initially assumed.The DRC is aware of the problemsraised by the current trend for cheaptravel insurance policies sold by travelagents and banks, which require littleinformation from the applicant. Thismakes it difficult to screen and so disabledpeople could acquire a policy like this andthen find out they are not covered if theirclaim relates to their disability.It is vital that the companies make theirlimitations clear up front. Ideally a systemneeds to be put in place whereconveniently sold travel insurance can bemore flexible and require moreassessment at the application stage forthose that need it. This would avoidblanket bans and exemptions and wouldprovide better-tailored travel insurancefor everyone.

Discover moreThere are regulations that contain theduties insurance companies have underthe DDA, and the DDA Part 3 Code ofPractice has a chapter on insurance.There is also ABI guidance on insuranceand the DDA which can be down loadedfrom the ABI website.

Contact details for the DRC are:Website: www.drc-gb.org; Telephone(from the UK): 08457 622 633;Textphone: 08457 622 644 (You canspeak to an operator at any timebetween 8am and 8pm, Monday toFriday); Fax: 08457 778 878; Post: DRCHelpline, FREEPOST MID02164,Stratford upon Avon, CV37 9BR, UK.


32


FEATURE


AIR AMBULANCE cont.

1. Air Ambulance

2. Assistance Companies

3. Air Ambulance Interior

4. Cost Containment

5. Claims Management

6. Critical Care Patient Transport

7. Funeral Directors

8. Healthcare Clinics

9. Hospitals

10. Medical Escort on Commercial Airlines

11. Medical Provider

12. Medical Screening

13. Re-insurance

14. Travel Agents

CATEGORY KEY

South Pacific Air Ambulance Scotty Watson – Managing Director

NEW ZEALAND [email protected] Tel: +649 256 9000SINGAPORE Fax: +649 256 9111

EUROPE

Air Ambulance Worldwide Inc. Mark Jones – President

35246 US Hwy 19 North [email protected]#210 www.airambulanceworldwide.comPalm Harbor Tel: +1 727 781 1198Florida 34684 Fax: +1 727 786 0897USA

Augsburg Air Ambulance Roland Schoberth – Director

Roseggerstr 17 [email protected] www.ambulanzflugdienst.deGersthofen Tel: +49 821 299 1020GERMANY Tel: +49 821 299 2030

Air Medical Ltd Glenn Salt – Flight Operations Manager

Oxford Airport [email protected] www.airmed.co.ukOxfordshire Tel: +44 1865 842 887OX5 1QX Tel: +44 1865 370 642UK

Alba Consulting Ltd. Andrew McGill – Managing Director

14 Belvedere Gardens [email protected] www.albaconsulting.orgEast Sussex Tel: +44 1892 610 560TN6 2LR Fax: +44 1892 652 620UK

AmbuAir MUDr Jiri Klimes – Director

Mikuleckeho 1310/E [email protected] 000 www.ambuair.czPrague 4 Tel: +420 602 767767CZECH REPUBLIC Fax: +420 244 472910

DRF German Air Rescue Frank Spirgatis – Director, Fixed Wing

Raiffeisenstr 32 [email protected] Filderstadt www.german-air-rescue.deGERMANY Tel (24hr): +49 711701070

Fax: +49 711701071

Euro-flite Air Ambulance Juani Missonen – Coordinator

Helsinki International Airport [email protected] Box 187 Tel: +358 20510 1900FIN-01531 Fax: +358 20510 1901VantaaFINLAND

FAI – rent-a-jet AG Volker Lemke – Director Sales & Marketing

Flughafenstrasse 100 [email protected] Nuremberg www.rent-a-jet.deGERMANY Tel: +49 911 36009 31

Fax: +49 911 36009 59

Global Medical Support Otto Karud – Marketing Director

Ullevaal University Hospital [email protected] Oslo www.globalmedicalsupport.comNORWAY Tel: +47 22 96 50 50

Telfax: +47 22 96 50 51

IFRA Bernhard Fantner – Assistant to Director

Bahnhofplatz 13/5 [email protected] 160 www.ifra.at3500 Krems Tel: +43 2732 825 610AUSTRIA Fax: +43 2732 851 01

Jet Executive International Charter Günter Krahé – Ground Ops Manager

Mündelheimer Weg 50 [email protected] www.jetexecutive.comDüsseldorf Tel: +49 211 602 7775GERMANY Fax: +49 211 602 77766“Homebase Frankfurt/Main”

Luxembourg Air Ambulance Andy Breeden – Operations

175A, rue de Cessange [email protected] www.air-ambulance.luLUXEMBOURG Tel (24 hr): +352 420 440 1

Fax: +352 420 440 366

1. AIR AMBULANCE

AFRICA



AMREF Flying Doctor Service Dr Bettina Vadera – Medical Director

Wilson Airport [email protected] www.amref.orgPO Box 18617 Tel: +254 20 600 090Nairobi Fax: +254 20 344 170KENYA

Netcare 911 Aeromedical Shane MaraisNetcare 911 House [email protected] New Road www.netcare911.co.zaHalfway House Tel: +27 11 254 1392Midrand 1685 Fax: +27 11 254 1405SOUTH AFRICA

AUSTRALASIA



Asia Assistance Partners Siriporn Wongurai – Int Ops Director

184/235 Forum Tower [email protected] Flr Ratchadapisek Rd www.aapartners.netHuaykwang Tel: +662 645 3733-5Bangkok 10320 Fax: +662 645 3732THAILAND

Asia Medical Assistance Abhijeet Sachdev – Vice President

DLF City-ll [email protected] Road www.privathealthcaregroup.comNew Delhi Tel: +91 9899 198 198Gurgaon 122002 Fax: +91 1242 235 2527INDIA

CareFlight International Colin Robshaw – Co-ordinator

Westmead Hospital Campus [email protected] Box 159 www.careflight.orgWestmead Tel: +61 1300 655 855NSW 2145 Fax: +61 2 9891 1284AUSTRALIA

Medical Wings Jarin Kiatfuengfoo – Director

222 Room 3602 [email protected] Int Airport www.medicalwings.comViphavadeo-Rangsit Rd Tel: +662 247 3392Sikan, Donmuang Fax: +662 535 4355Bangkok 10210, THAILAND

Mediflight Debra O’Brien – Operations Manager

Royal Adelaide Hospital [email protected] Terrace www.mediflight.com.auAdelaide Tel: +61 8 8223 6618SA 5000 Fax: +61 8 8223 6340AUSTRALIA

Pacific Flight Services Pte Ltd Katherine Yeo – Assistant Marketing Mgr

ST Aerospace Engineering Bldg [email protected] West Camp www.fly-pfs.comSeletar Airport Tel: +65 6481 3756797796 Fax: +65 6482 1727SINGAPORE


SERVICEDIRECTORY 34 To have your company listed in the Service Directory email: [email protected]


AIR AMBULANCE cont. AIR AMBULANCE cont.Global Air Response Clifton E. Carothers – President

7355 S Peoria Street [email protected]/ Suite 209 www.airresponse.netEnglewood Tel: +1 800 631 6565CO 80112 Fax: +1 888 631 6565USA

JET ICU Carlos Elcoro– International Program Director

15725 Fairchild Drive [email protected] www.jeticu.comFL 33762 Tel: +1 877 453 8428USA Fax: +1 727 524 9826

National Air Ambulance George Martinez– Mgr Flight Co-ordination

3495 SW 9th Ave [email protected] Lauderdale www.nationalairambulance.comFL 33315 Tel: +1 954 359 9900USA Fax: +1 954 359 9500

Skyservice Air Ambulance David Ewing – VP Int. Market Development

YUL/Trudeau Int Airport [email protected] Avenue Ryan www.skyservice.comMontreal (Quebec) Tel: +1 514 497 7000H9P 1A2 Fax: +1 514 636 0096CANADA

2. ASSISTANCE COMPANIESAFRICA


Wilson Airport [email protected] Road www.amref.orgPO Box 18617 Tel: +254 20 600 090Nairobi Fax: +254 20 344 170KENYA

Connex Assistance Egypt Lara Helmi – Int Network Director

Office II [email protected] Floor www.connexassistance.com6 Sad El Aali Street Tel (24hr): +2 02 336 0005Dokki, Cairo Fax (24hr): +2 02 762 0003EGYPT

Medic Assistance Int Ltd. Dr Siddick Maudarbocus – Med Dir

85 Newry Complex [email protected] Jean Road [email protected] Tel: +230 464 2019MAURITIUS Fax: +230 464 1298

AUSTRALASIA

Asia Assistance Partners Siriporn Wongurai – Int Ops Director

184/235 Forum Tower [email protected] Flr Ratchadapisek Rd www.aapartners.netHuaykwang Tel: +662 645 3733-5Bangkok 10320 Fax: +662 645 3732THAILAND

Asia Medical Assistance Abhijeet Sachdev – Vice President


Blue Dot Assistance Dr Faustinus Wirasadi– President Director

Blue Dot Center [email protected] K, L, M www.idn.co.idJl Gelong Baru Utara 5-8 Tel: +62 21 5696 2399Tomang, Jakarta Barat 1440 Fax: +62 21 5696 2499INDONESIA

Customer Care Pty Ltd Janine Benson – Operations Manager

Level 3 [email protected] Miller Street www.customercare.com.auNorth Sydney 2060 Tel: +612 9202 8222NSW Fax: +612 9202 8220AUSTRALIA

First Assistance Mary-Jo McDonald – General Manager

PO Box 17-310 [email protected] www.firstassistance.co.nzAuckland Tel: +64 9 356 1650NEW ZEALAND Fax: +64 9 525 1278

Med Call GmbH Michael Diefenbach – CEO

Bahnhofstrasse 22 [email protected] www.medcallgmbh.comWiesbaden Tel: +49 611 9310 310GERMANY Fax: +49 611 9310 311

Medical Jet Services & Partner W DichtlRadetzkystr 19 [email protected] www.medicaljetservice.com1030 Tel: +43 1 713 2799AUSTRIA Fax: +43 1 713 2799-19

Red Star Aviation Mustafa Atac – CEO

Sabiha Gokcen Int Airport [email protected] Blok Kurtkoy 34912 www.redstar-aviation.comIstanbul Tel: +90 216 588 0216TURKEY Fax: +90 216 588 0225

Swiss Air Ambulance/REGA Walter Stunzi – PR/Marketing Mgr

PO Box 1414 [email protected] Airport www.rega.chCH-8058 Tel: +41 333 333 333SWITZERLAND Fax: +41 44 654 3590

Tyrol Air Ambulance Jakob Ringler – Managing Director

PO Box 81 [email protected] www.taa.atInnsbruck Airport Tel: +43 512 224 220AUSTRIA Fax: +43 512 288 888

NORTH AMERICA

Aerojet Stuart Hayman – President

4631 NW 31st Ave #220 [email protected] Lauderdale www.aero-jet.comFL 33309 Tel: +1 954 730 9300USA Fax: +1 954 485 6564

Air Ambulance Professionals, Inc. Brian L. Weisz – President

Ft. Lauderdale Executive Airport [email protected] South Perimeter Rd www.airambulanceprof.comHangar 36B Ft. Lauderdale Tel: +1 954 491 0555Florida 33309 Fax: +1 954 491 6114USA

Air Ambulance Specialists, Inc. Donald Jones – President

8001 S.Interport Blvd. [email protected] 250 www.airaasi.comEnglewood Toll Free: +1 800 424 7060CO 80111 Tel: +1 720 875 9182USA Fax: +1 720 875 9183



AirMed International LLC Cindy Horvath – Clinical Care Co-ordinator

1000 Urban Center Drive [email protected] 470, Birmingham www.airmed.comAL 35242 Tel: +1 205 443 4840USA Fax: +1 205 443 4841

Air Trek Air Ambulance David Bump – Vice President

28000 A-5 Airport Road [email protected] Gorda www.medjets.comFL 33982 Toll free: +1 800 633 5387USA Tel: +1 941 639 7855

American Care Air Ambulance Joel Reynolds – General Manager

8775 Aero Drive [email protected] 120 www.americancareairambulance.comSan Diego Tel: +1 858 627 0515CA 92123 Fax: +1 858 627 0534USA

Canadian Global Air Ambulance Jeff McIntosh – President

Toronto [email protected] www.canadianglobalair.caVancouver Toll Free: +1 800 563 3822CANADA Tel: +1 204 888 5555

Fax: +1 204 888 9111


SERVICEDIRECTORY 35call +44 (0) 117 925 5151 To make an alteration to a listing email: [email protected]


ASSISTANCE COMPANIES cont. ASSISTANCE COMPANIES cont.

SOS International Helle Drager – Marketing Manager

Nitivej 6 [email protected] www.sos.dkFrederiksberg Tel: +45 7010 5050Copenhagen Fax: +45 7010 5056DENMARK

TBS Team 24 d.o.o Edvard Hojnik – General Manager

Ljubljanska Ulica 42 [email protected] Maribor www.tbs-team24.comSLOVENIJA Tel: +386 2618 2301(Croatia, Slovenia, Bosnia-Herzegovina, Fax: +386 2618 5800Macedonia, Serbia-Montenegro, Kosovo )

NORTH & CENTRAL AMERICA

ASISTUR Emilio Guevara – Managing Director

Prado 208 [email protected]/ Colon y Trocadero www.asistur.cuHabana Vieja Tel: +537 8664499Ciudad Habana 10100 Fax: +537 8668087CUBA

Assured Assistance Inc. Martha Turnbull – Director of Operations

6880 Financial Drive [email protected] Tel: +1 905 816 2495Ontario Fax: +1 905 813 4719L5N 7Y5CANADA

CMN Inc. Peter Lozier – Vice President

140 Renfrew Drive [email protected] 103 Markham www.canmednet.comOntario Tel: +1 905 669 4333L3R 6B3 Fax: +1 905 669 2221CANADA

Global Excel Management Brian Allatt – CEO

73 Queen Street [email protected], Quebec www.globalexcel.caJIM IJ3, CANADA Tel: +1 866 566 11304242 Cranmore Court Fax: +1 819 566 8335Belle Isle, Fl 32812, USA

Medex Assistance Corporation Linda McGee – SVP of Sales

8501 LaSalle Road [email protected] 200 www.medexassist.comBaltimore Tel: +1 410 453 6300MD 21286 Fax: +1 410 453 6301USA

OneWorld Assist Taka Katsube – Dir Assist & Cost Mngment

10th Floor [email protected] No.3 Road www.oneworldassist.comRichmond, BC Tel: +1 604 303 2113V6Y 2B2 Fax: +1 604 276 4593CANADA

TMCA Margaret Whartom – Ops Manager

217 Broadway [email protected] 600 www.tmcatravel.comNYC Tel: +1 212 964 8580NY 10007 Fax: +1 212 406 1520USA

World Travel Protection Canada Inc. Dr Ron Mayer – President & Chf Med Officer

400 University Avenue [email protected] Floor www.wtp.caToronto Tel: +1 416 977 3565Ontario M5G IS7 Fax: +1 416 205 4676CANADA

3. AIR AMBULANCE INTERIOR

Air Ambulance Technology Egon Kuntner – President

A-5282 [email protected] www.airambulancetechnology.comAUSTRIA Tel: +43 7722 85051

Fax: +43 7722 85051-22

4. COST CONTAINMENTEUROPE

ChargeCare International Philip Marshall – Director of Operations

PO Box 18 [email protected] www.chargecare.co.ukEX22 7WB Tel: +44 1409 261 368UK Fax: +44 1409 261 633

Global Assistance & Healthcare Mario Babin – Chief Executive Officer

Jalan Pattimura [email protected] Kebayoran Baru www.global-assistance.netJakaita Tel: +62 21 725 811512110 Fax: +62 21 725 7961INDONESIA


222 Room 3602 [email protected] Int Airport www.medicalwings.comViphavadeo-Rangsit Rd Tel: +662 247 3392Sikan, Donmuang Fax: +662 535 4355Bangkok 10210 THAILAND

South Pacific Air Ambulance Scotty Watson – Managing Director

NEW ZEALAND [email protected] Tel: +649 256 9000SINGAPORE Fax: +649 256 9111

EUROPE & THE MEDITERRANEAN

ARC Transistance Hans Biekmann – Network Director

11 Avenue Pleiades [email protected] Brussels www.arctransistance.comBELGIUM Tel: +32 2 776 04 70

Fax: +32 2 776 04 99

Atlantic Assist Adriano Gouveia – Operations Manager

Rua da Alfandega 10-2.D [email protected] Box 750 www.atlanticassist.com9000-056 Funchal Tel: +351 291 214 200Madeira Fax: +351 291 214 202PORTUGAL

Express Assist Vardan Azatian – General Director

11-th Radialnaya, 2 [email protected] www.expressassist.ruMoscow Tel: +7 095 775 2090RUSSIA Fax: +7 095 775 2091

Global Voyager Assistance Costas Danilenko – CEO

PO Box II [email protected] www.gvassistance.comMoscow Tel: +7 095 775 0999RUSSIA Fax: +7 095 775 0998

Life Assistance Igor A Striganov – General Director

House 3/7 [email protected] Passage of Marinoi Roshi www.lifeassist.ru129594, Moscow Tel: +7 095 755 5678RUSSIA Fax: +7 095 631 0465

Mapfre Asistencia Pablo Alvert Sanz – Dep Reg Dir Europe

Sor Ángela de la Cruz, 6 [email protected] Madrid www.mapfreasistencia.comSPAIN Tel: +34 91 581 1320

Fax: +34 91 581 1850

Marm Assistance Jill Atac – CEO


MK International Emergency Services Minas Kaloumenos – General Manager

95, Ioanninon Street [email protected] Athens Tel: +30 210 5154600GREECE Fax: +30 210 5131660

Monitor International Robert Ince – Managing Director

Monitor House [email protected] Belmont Road www.monitorinternational.comSutton, Surrey Tel: +44 208 770 2753SM2 6DW Fax: +44 208 770 2756UK

SER Assistance Ltd. Dr S Zareceansky – Gen Mgr & Director

50/2206 Dizengoff Street [email protected] Tower Tel: +972 544 370 00264332 Tel-Aviv Fax: +972 362 919 91ISRAEL




4. COST CONTAINMENT cont. 6. CRITICAL CARE PATIENT TRANSPORT

EUROPE

Lufthansa German Airlines Doris Ehring – Product & Process Management

FRA SQ/B [email protected] Airport Tel: +49 561 9933 7020D-60546 Fax: +49 561 9933 117GERMANY

7. FUNERAL DIRECTORS

Bergen Funeral Sevice Scott Nimmo – Funeral Director

129 E 7th St. [email protected] York www.bergenfuneral.comNY 10009 Tel: +1 212 254 2864USA Fax: +1 201 288 5694“Servicing all of the USA, Canada, South & Central America”

Funeralcare International Roger Waddington

221 Upper Richmond Road [email protected] Tel: +44 20 8788 5303London SW15 6SQ Fax: +44 20 8788 2525UK

Global Networks Funeral Assistance Cristina Almudi – Managing Director

23 Blindmans Lane [email protected] www.gnfa.infoHertfordshire, EN8 9DR Tel: +44 1992 640 066UK Fax: +44 1992 785 030

MK Funeral & Transportation Services Minas Kaloumenos – General Manager

95, Ioanninon Street [email protected] Athens Tel: +30 210 5154600GREECE Fax: +30 210 5131660

Rowland Brothers International Melanie Walkling – Manager Int. Dept

299-305 Whitehorse Road [email protected] Croydon www.rowlandbrothersinternational.co.ukSurrey Tel: +44 20 8684 2324CR0 2HR Fax: +44 20 8684 8000UK

Servilusa Vanda Castro – Manager Int Dept

Agencias Funerarias SA [email protected] Dept. www.servilusa.ptRua do Entreposto Industrial Tel: +35 121 470 63008-2 Esq, 2610-135 Amadora Fax: +35 121 470 6499PORTUGAL

8. HEALTHCARE CLINICS

LuzDoc International Medical Serv. Ltd Dr Maria Alice Silva – Medical Director

Medical & Assistance Services [email protected] 25 de Abril, 12 www.luzdoc.comVilla da Luz Tel: +351 282 780 7008600-174, LUZ LGS Fax: +351 282 780 709PORTUGAL

Number One Health Group Dr Charlie Easmon – Director

1 Harley Street [email protected] www.executivescreen.comW1G 9QD Tel: +44 207 307 8756UK Fax: +447092 196 169

Privat Travel Clinics Abhijeet Sachdev – Vice President


M & V Administrators GmbH Jennifer Venables – Corp. Ops Director

Obergütschstrasse 33 [email protected] 7622 www.mv-administrators.comCH-6003 Luzern Tel: +41 41 210 6040SWITZERLAND Fax: +41 41 210 6039

Marm Assistance Jill Atac – CEO


OneWorld Assist Jeanette Harper – Business Dev. Manager

PO Box 419 [email protected] www.oneworldassist.comGU51 9AY Tel: +44 7786 982 624UK Fax: +44 1252 627 391

NORTH AMERICA

CMN Inc. Peter Lozier – Vice President

140 Renfrew Drive [email protected] 103 Markham www.canmednet.comOntario Tel: +1 905 669 4333L3R 6B3 Fax: +1 905 669 2221CANADA


73 Queen Street, Lennoxville [email protected], JIM 1J3, CANADA www.globalexcel.ca4242 Cranmore Court Tel: +1 866 566 1130Belle Isle, FL 32812 Fax: +1 819 566 8335USA

Global Medical Management Raija Itzchaki – Assistant VP Marketing

7901 SW 36th Street [email protected] 100 www.gmmusa.comDavie Tel: +1 954 370 6404FL 33328 Fax: +1 954 370 8613USA

Health Systems International Peggy Novotny – VP / Gen Mng. Int Bus.

5975 Castle Creek Parkway [email protected] 100 www.us-hsi.comIndianapolis Tel: +1 317 806 2000IN 46250 Fax: +1 317 806 2033USA

Hygeia Corporation Joe Radigan – Chief Operating Officer

15500 New Barn Road [email protected] 200 www.hygeia.netMiami Lakes Tel: +1 305 594 9291FL 33014 Fax: +1 305 594 9201USA

Medsave USA Noam Baruch – CEO

1400 Old Country Road [email protected] 109 www.medsaveusa.comWestbury Tel: +1 516 622 1700NY 11590 Fax: +1 516 622 1733USA

TMCA Margaret Whartom – Ops Manager

217 Broadway [email protected] 600 www.tmcatravel.comNYC Tel: +1 212 964 8580NY 10007 Fax: +1 212 406 1520USA

5. CLAIMS MANAGEMENT

Global Assistance & Healthcare Nathan Hannah – TPA Mgr Asia/Pac

Jalan Pattimura [email protected] Kebayoran Baru www.global-assistance.netJakaita Tel: +62 21 725 811512110 Fax: +62 21 725 8951INDONESIA


73 Queen Street, Lennoxville [email protected], JIM 1J3, CANADA www.globalexcel.ca4242 Cranmore Court Tel: +1 866 566 1130Belle Isle, FL 32812 Fax: +1 819 566 8335USA


SERVICEDIRECTORY 37call +44 (0) 117 925 5151 To make an alteration to a listing email: [email protected]


10. MEDICAL ESCORT ON COMM AIRLINES cont.American Care Air Ambulance Joel Reynolds – General Manager

8775 Aero Drive [email protected] 120 www.americancareairambulance.comSan Diego Tel: +1 858 627 0515CA 92123 Fax: +1 858 627 0534USA

Global Air Response Clifton E. Carothers – President

7355 S Peoria Street [email protected]/ Suite 209 www.airresponse.netEnglewood Tel: +1 800 631 6565CO 80112 Fax: +1 888 631 6565USA

11. MEDICAL PROVIDER



Atlantic Assist Adriano Gouveia – Operations Manager

Rua da Alfandega 10-2.D [email protected] Box 750 www.atlanticassist.com9000-056 Funchal Tel: +351 291 214 200Madeira Fax: +351 291 214 202PORTUGAL

SOS – Hungary Assistance Dr Peter Felkai – Medical Director

Szentendrei Street 301 [email protected] www.soshungary.huH-1039 Tel: +36 1240 0475HUNGARY Fax: +36 1439 1440

12. MEDICAL SCREENING

Risck Solutions Ltd Ian Findlay – Commercial Director

The Medical Centre [email protected] Broomhill Road www.risck.co.ukBrislington Tel: +44 870 428 4248Bristol BS4 5RG Fax: +44 871 226 8810UK

The Medical Screening Company Helen Lishmund – General Manager

Monitor House [email protected] Belmont Road www.prescreen.co.ukSutton, Surrey Tel: +44 208 770 2778SM2 6DW Fax: +44 208 770 2756UK

Travel & Medical Insurance Services Michael J Turner – MD

1st Flr Suite, West House [email protected] High Street www.travelandmedical.netOrpington, Kent Tel: +44 845 058 8000BR6 0JQ Fax: +44 845 053 3000UK

Travel Screen Sandra Howell – General Manager

PO Box 5765 [email protected] www.travelscreen.co.ukEssex Tel: +44 1702 587 007SS1 9BE Fax: +44 1702 584 731UK

13. RE-INSURANCE

Crispin Speers & Partners ltd David Stirling – Marketing Manager

St Clare House [email protected] Minories www.cspinsurance.comLondon EC3N 1PE Tel: +44 20 7977 5700UK Fax: +44 20 7702 9276

14. TRAVEL AGENTS

Voyageur Aeromedical Travel Marc Lucus – General Manager

Voyageur Buildings [email protected] Colston Street www.voyageur.co.ukBristol BS1 5AX Tel: +44 (0)117 927 3554UK Fax: +44 (0)117 925 5940

9. HOSPITALS

ASIABangkok Medical Center Jane Bailey – Int Marketing Executive

International Medical Center [email protected], Soi Soonvijai 7 www.bangkokhospital.comNew Petchburi Road Tel: +66 2310 3460Bangkok 10320 Fax: +66 2310 3367THAILAND

Privat Hospital Abhijeet Sachdev – Vice President


Wockhardt Hospitals Pradeep Thukral– Head International Marketing

Mulund Goregaon Link Road [email protected], [email protected] 078 www.wockhardthospitals.netINDIA Tel: +91 9819015749UK Toll Free No:0 808 234 6343 Tel: +91 22 26596502US Toll Free No: 1 800 730 6373 Fax: +91-22-55994242

EUROPE

Hospital Clinica Benidorm Dra Ana Paz Brown – Medical Director

Avenida Alfonso Purchades 8 [email protected] Benidorm www.clinicabenidorm.comAlicante Tel: +34 96 585 3850SPAIN Fax: +34 96 586 4345

Xanit Hospital de Benalmadena Dr. Juan Bosco Rodriguez Hurtado – Director

Camino de Gilabert s/n [email protected] www.xanit.net29630 Tel: +34 952 367 190Malaga Fax: +34 952 367 191SPAIN

NORTH AMERICA

Baptist Health International Center of Miami Yohandra Fuentes – Finance Manager

8940 North Kendall Drive [email protected] 601-E www.baptisthealth.net/internationalMiami, Fl 33176 Tel: +1 786 596 2373USA Fax: +1 786 596 5979

10. MEDICAL ESCORT ON COMMERCIAL AIRLINES

AFRICA



AUSTRALASIA

CareFlight International Colin Robshaw – Co-ordinator

Westmead Hospital Campus [email protected] Box 159 www.careflight.orgWestmead Tel: +61 1300 655 855NSW 2145 Fax: +61 2 9891 1284AUSTRALIA


222 Room 3602 [email protected] Int Airport www.medicalwings.comViphavadeo-Rangsit Rd Tel: +662 247 3392Sikan, Donmuang Fax: +662 535 4355Bangkok 10210 THAILAND

Mediflight Debra O’Brien – Operations Manager

Royal Adelaide Hospital [email protected] Terrace www.mediflight.com.auAdelaide Tel: +61 8 8223 6618SA 5000 Fax: +61 8 8223 6340AUSTRALIA

NORTH AMERICA





CONTRIBUTORSRoger Allnutt is a freelance travel writer based inCanberra, Australia, and has material publishedwidely in magazines and newspapers in Australiaand New Zealand. He travels widely both in Australiaand overseas.

Dick Atkins is chief counsel for InternationalRecoveries, Philadelphia, which provides global legalassistance to the travel insurance industry. He is incharge of International Recoveries’ legal hotline andhas been involved in handling international legalincidents for the past 20 years. He can be reachedvia email on [email protected]

Paul Benen qualified as a doctor in London in 1981,and for the next ten years worked in a variety ofmedical environments, both in hospital and in familypractice. As well as working in the UK, he traveledextensively and worked in Australia, New Zealand,Jamaica and France. After initial exposure to theworld of medical assistance with Europ Assistanceand Mondial Assistance, he and Peter Mason formedHealix in 1992 to provide assistance-related medicalservices to the insurance industry.

Robin Gauldie is a freelance journalist specialising intravel, aviation and related sectors. A former editor ofthe pan-European travel industry newspaper TTGEuropa, he has also edited Destination ASEAN (theofficial tourism magazine of the Association of SouthEast Asian Nations); ABTA Magazine (the officialpublication of the Association of British Ravel Agents;and Travel Agent International. He contributes to theTimes, the Sunday Telegraph, the Scotsman, theSunday Mirror, and to numerous specalist magazinesand is the author of more than 20 travel guidebooksto destinations ranging from Dublin to Sri Lanka.

iJET Intelligent Risk Systems (www.ijet.com), thetravel risk management company, provides real-timetravel intelligence information through its award-winning Worldcue (copyright) technology platform fortracking and communicating with travellers. iJETservices are backed by regional and categoryspecialists from the fields of intelligence, security,travel, and health who staff an around-the-clockoperations centre in Annapolis, MD.

David Ing is a freelance journalist covering mainlytravel and tourism issues in Spain. He writes on airtransport for a leading international news agency, aswell as contributing special features to Newsweekand writing in in-flight magazine articles andguidebooks.

Milan Korcok is an award-winning freelance healthpolicy and economics writer who covers travel insurance,public health, and medical education issues in Canadaand the United States. He has been writing about healthfinancing and policy issues in these countries since the1960s and is a frequent contributor to leading NorthAmerican professional journals and consumer media. Helives in Fort Lauderdale, Florida.

Natalie Salmon is the Head of Access to Servicesand Transport at the Disability Rights Commission,where she has worked since 1994. Previously,Natalie worked as Disability Coordinator in theMayor’s Office at the Greater London Authority,where she organized the Mayor of London’sEuropean Year of Disabled People programme ofevents. She has also worked for the Royal NationalInstitute for the Blind and for the Jobcentre as aDisability Employment advisor.

Roger St Pierre is one of the UK's most experiencedtravel, music and motoring writers and has visited 111countries on five continents. His insights appear in awide range of consumer and trade publications.Roger's 33 published books include a history ofMcDonald's, guides to such destinations as Orlando,Moscow, Edinburgh and the Costa del Sol,biographies of Marilyn Monroe, James Dean, BobMarley and Jimi Hendrix and a range of cycling books,the latest of which is A Bike Is For Life.

Christopher Wales worked in the ferry industry forover 20 years with such companies as P&O, StenaLine, Eurotunnel and Wightlink. He was Chairman ofthe Institute of Travel & Tourism, a founder boardmember and Chairman of the Coach Tourism Counciland co-founder of the Association of Tour Operatorsto France (ABTOF), for which he was awarded theTourism Medal by the French government.

First Assistancepromotes McDonaldMary-JoMcDonald hasbeen promotedto the newposition ofGeneral Managerat New Zealand’sFirst Assistance.She will beresponsible forthe general day-to-daymanagement ofthe businessacross key areasof automotiveassistance,medical and travel assistance, business assistance,property assistance and third party administrationservices. In addition she will retain responsibilitiesfor sales and marketing and key accountmanagement.Managing Director Murray Berkett said: “Mary-Jo’swork with First Assistance has been outstanding; herpromotion is well deserved, timely and is duerecognition of her knowledge and expertise acrossall aspects of the business.”

8-10 May International Travel

Insurance Conference (ITIC)Hilton Intercontinental,

Brighton, UKwww.itic.org.uk

8-10 May Hospitality Technology

Buyers Conference (BITAC) Marriott Marquis, New York, UShttp://www.hospitalityebusiness.co

m/downloads/BITAC.pdf 8-11 May

Bahrain International TravelExpo - BITE 2006

Bahrain International ExhibitionCenter (BIEC)

www.bitebahrain.com10-11 May

2nd Asian Conference onM&As, Commutations &

RunoffsGrand Copthorne Waterfront,

Singaporewww.asiainsurancereview.com/Conferences/whenready/Runoffwhenr

eady.htm10-12 May

Towards a tourism based ondevelopment and solidarity

World Congress on Social TourismAubagne, Provence, France

www.bits-int.org23-25 May

CPM 2006 WestThe Mirage, Las Vegas, Nevada,

UShttp://www.contingencyplanninge

xpo.com24-25 May

Claims ConferenceShanghai, China

www.asiainsurancereview.com/Conferences/whenready/Claimswhen

ready.htm25-27 May

International Trade Fair and

Conference for TourismIstanbul, Turkey

www.travelturkey-expo.com 30 May-1 June

IMEX 2006Frankfurt, Germany

http://www.imex-frankfurt.com/ 3-7 June

Insurance Accounting &Systems Association Annual

ConferenceBoston, US

www.iasa2.org5-6 June

Branding & Marketing forInsurance

Singaporewww.asiainsurancereview.com/Conferences/whenready/Brandingwh

enready.htm20-21 June

Catastrophe Conference Renaissance Harbour View Hotel,

Hong Kongwww.asiainsurancereview.com/Co

nferences

Diary dates


Published on behalf of Voyageur Publishing & Events Ltd,Voyageur Buildings, 43 Colston Street, Bristol BS15AX, UK

The information contained in this publication has been publishedin good faith and every effort has been made to ensure itsaccuracy. Neither the publisher nor Voyageur Ltd can accept anyresponsibility for any error or misinterpretation. All liability forloss, disappointment, negligence or other damage caused byreliance on the information contained in this publication, or in theevent of bankruptcy or liquidation or cessation of the trade ofany company, individual or firm mentioned, is hereby excluded.

Printed by Pensord Press

Copyright © Voyageur Publishing 2004. Materials in this publicationmay not be reproduced in any form without permission.

INTERNATIONAL TRAVEL INSURANCE JOURNAL ISSN 1743-1522

Aviva appointsDeightonAviva has appointed Shayne Deighton as groupfinancial management director, reporting to groupfinance director, Andrew Moss. He joins from Ernst& Young where he has been a partner in the lifeactuarial practice since 2001, servicing a wide rangeof consulting and audit clients in the UK, Ireland andEurope.In his new role, Deighton will lead a team oftechnical specialists responsible for the developmentand implementation of Aviva’s capital and financialrisk management framework and of the operationaland governance structures to support it.

Upton joins EuropAssistance teamEurop Assistance has appointed Rob Upton as salesand marketing director. He is an associate of theChartered Insurance Institute, with over 20 years’general insurance experience, and has held anumber of senior roles, including national salesmanager for Mondial Assistance.Charles Walckanaer, the firm’s managing director ofthe UK and Ireland, said: “Rob brings with himconsiderable knowledge and experience gainedwithin the insurance, banking and E-commerceindustries. He will be a major asset to EuropAssistance as we seek to further expand ourpresence in these markets.”

New staff for lawfirm BLLRegional lawfirm BlakeLapthornLinnell (BLL)has recruitedCostas Andrea,pictured right,as a partner tohead the firm’snew TravelUnit. Andrealeads the unitas part of BLL’sPersonal Injuryand ClinicalNegligencePracticesGroup, which will deal with accident claims arisingabroad, both on behalf of individual clients andinsurers.He joins from Penningtons Solicitors LLP, where hewas the lead partner of the personal injury andtravel department, and recommended as a ‘Leaderin the field of travel and tourism’ by independentlegal directory Chambers UK: A Client’s Guide to theLegal Profession. Prior to this he ran his own firmAndrea and Co., which specialised in this area.

Andrea isbased at thefirm’s office inFareham,Hampshire.JulieRemmington,pictured left,joins Costasas a travelclaimsconsultant inthe unit.AlisonMcClure,head of thePersonalInjury and

Clinical Negligence Group, said: “We are extremelypleased Costas has joined us to develop thegrowing area of foreign personal injury claims. He isone of the leading practitioners in the UK in thisfield, and it is an exciting opportunity for the firm tobecome a leader in this field of business.”Andrea added: “Blake Lapthorn Linnell’s strongreputation in the area of personal injury and clinicalnegligence makes it perfectly positioned to launchthe specialist travel unit. Also, it is one of the fewfirms with the experience and resources to offersuch a valuable service.”

Managementchanges at SOSPeterTangstrom,pictured right,has beenappointedoperationsmanager forSOSInternational’smedicaldepartment.He hasworked for thefirm since1997 andduring the last five years he was the manager of the

network andpurchasingdepartment. Inhis new role hewill beresponsible forthemanagementanddevelopment ofbothdepartments.ConsequentlyCorien Hiddink-van der Poel,pictured left, has

been named manager of the network andpurchasing department. She will be responsible forthe department, in which she has worked since2002.

Senen new CEO atMapfre AsistenciaMapfre Asistencia has appointed Rafael Senen asChief Executive Officer of the Assistance Unit and asmanaging director and chairman of the ExecutiveCommittee. He replaces Primitivo de Vega. Inaddition, the company has appointed NikosAntimissaris as the new general manager.

Fortis announcesnew directorsThe Fortis board of directors has appointed ClaraFurse and Reiner Hagemann as non-executivedirectors for a three-year term.Furse, 48, has dual UK and Canadian nationality andhas been chief executive of the London StockExchange since 2001. She is a board member ofEuroclear PLC and LCH.Clearnet and is also amember of the Advisory Council of the Prince’sTrust, a Companion of the Chartered ManagementInstitute, a member of the CBI President’sCommittee and a member of the Court of theGuild of International Bankers.Hagemann, 58, is of German nationality andcurrently serves as a non-executive director at EONEnergie AG and Schering AG and is chairman of theGerman Advisory Board of Cerberus CapitalManagement.


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