See PDF of the presentation used during the breakfast:

Presentacion SegurCaixa Adeslas JM 20220322 v7

Breakfast-debate with Mr. Javier Murillo Ferrer, General Manager of SegurCaixa Adeslas

A little history

Adelas has been a leader in health insurance for more than 20 years. In 2009 this company was acquired by La Caixa, to give rise to SegurCaixa Adeslas (SCA), shortly after (2011), Mutua Madrileña acquired 50% of the shares of this company.

During this 2010-2020 period, SCA has established itself as a solvent project with sustainable and profitable growth, going from a turnover of 1,854 million euros in 2010 to almost 4,000 in 2020, and multiplying its profitability by four during this time.

SCA is the second non-life entity, with a growth rate above the market.

What are the levers that explain this success

There are two levers that explain this behavior, which we could call successful:

• Its leadership in health, since of the 4,000 million turnover, almost 3,000 correspond to health. Health insurance has not stopped growing in this period.
• Its strength in distribution, fundamentally through the banking channel, which is extraordinarily successful, coexists with other more classic channels that have also worked. Currently, around 70-75% of sales are produced through the banking channel.

Very good behavior of health insurance

Health insurance has had a great performance in this period, with great growth, which in the period 2012-2015 (in the midst of the crisis) had a CAGR of 2.8% and in 2016-2021, the CAGR was 5% .

This growth was due both to the increase in the number of premiums and to the increase in price, but above all to the first cause, which explains 70% of the growth, with the increase in prices being responsible for only 30% of this growth.

This good behavior of health insurance explains that, within SCA, health insurance has been gaining more weight, going from being 21.8% of premiums in 2012 to being 25.7% in 2021.

A volume business

The technical margin of health insurance is moderate, around 6% of premiums, with 78-79% corresponding to claims (medical expenses) and between 14-14.5% to administrative expenses and other technical expenses.

This margin leads us to say that the health insurance business is a volume business and one in which you have to continually be well above efficiency.

Good behavior during the pandemic

A pandemic is not technically insurable. On the other hand, a reading of the contract conditions could have led insurance companies to exclude care for the COVID-19 pandemic from health insurance care.

However, health insurance as a sector quickly turned to care for its policyholders in COVID, which contributed to an increase in the prestige of health insurance. It is clear that this decision was a success, from an industry perspective.

On the other hand, the pandemic has had a positive effect on costs, due to the withdrawal and the difficulty of carrying out ordinary health activity in the hardest moments of confinement. This caused the cost rate to drop in 2020, thus increasing the profitability of the business in that year. In 2021, with the recovery of activity, profitability has returned to figures that are more consistent with historical figures.

The evolution of health insurance is linked to the maturity of the private health system

Private healthcare spending in Spain represents almost 30% of total healthcare spending, one of the OECD countries with the highest percentage of private healthcare spending. 9 million people have voluntary health insurance, to which must be added the almost 2 million citizens covered by insurers under the administrative mutualism system.

This means that between 23-24% of the population is covered by health insurance, this percentage being higher in some communities, such as Madrid (36.7%), Catalonia (31.8%) and the Balearic Islands (29.5%). ). This fact is especially noteworthy if we take into account that in 2011 only 18.9% of the population was covered by health insurance, having risen to 23.4% in 2020, an increase of 4.5 percentage points.

In addition, it is an insurance that is used. Despite the double coverage in a high percentage of cases, health insurance is widespread seen among its clients as the first option to solve their health problems.

It is a very concentrated insurance, since the three main entities manage almost 60% of the premiums, and more than 70% if we take into account the first five companies.

As is known, the main modality is health care (the one in which the insurer has to offer a network of providers), while the reimbursement of expenses (the insurer fully or partially covers the costs of care, in accordance with the contract) is very minority.

Regarding the segments, individual insurance predominates (purchased directly by the individual or his family), which represent 51.4% of the premiums; followed by groups (28.6% of premiums), a segment that has had great growth in recent times; the civil servants of the administrative mutualism are 16.7% of the premiums and, finally, dental insurance, although very profitable and growing, only represents 3.3% of the premiums.

Health insurance: a solid business for its growth, but full of challenges

Health insurance enjoys high levels of acceptance among the population. On the other hand, at the company level, it is possibly the most valued social benefit.

However, health insurance faces three major challenges:

• Patient/client experience

Promoting quality assistance: effective, safe and very agile.

Boosting digitization to improve the customer experience

• Assess health outcomes

Providing the health care that is needed and, at the same time, working on health promotion, prevention and self-care

• Value-based healthcare

Prioritize value for patients over quantity, forcing changes to the way certain aspects of health insurance work.

Health insurance is a great manager of health activity in terms of cost/effectiveness, from this perspective it is a great partner for Administrations and companies.

Three critical issues

There are three critical issues that health insurance, as a sector, has to deal with:

• Dynamics of growth in healthcare costs, for many reasons (new diagnostic and therapeutic technologies, chronicity, aging, new demands, etc.), which contrasts with relatively cheap premiums in relation to surrounding countries.

This is, of course, a critical element for providers and professionals, who sometimes cannot be paid as desired.

This is an issue that will have to be addressed, although it will have to be done gradually enough to avoid a massive loss of policyholders.

• Sustainability of the mutual society model for public employees. The mutual insurance model is very important, since it demonstrates the capacity of health insurance to provide comprehensive health care to a group of insured persons (outside the dual coverage system) and represents future potential to be preserved. If the model ended, the impact on both insurance and private provision would be very relevant.
• Digitization aimed at adding value. Many times a digitization is seen with a more commercial orientation, without going into the hard core of the service. There is a need to offer integrated solutions that judiciously combine face-to-face with remote activity. On the other hand, new technologies and their data analysis possibilities are going to radically change the way care is offered.

5 topics for discussion

During the debate, five topics were raised, which are only mentioned, without trying to exhaust the richness of the discussion.

1. Are we going to continue with the status quo or can steps be taken towards a model where health insurance is no longer a duplicate model?

Health systems are largely conditioned by the history, economy, culture and values ​​of a country and what we have seen is that changes in healthcare are very difficult in all countries. Radical changes, such as those that occurred a few years ago in the Dutch model, are not in sight in our country.

In this context, the public system has to fulfill its mission, which is not easy at all; and as for private insurance, it must continue to improve, since it is a great asset for the country, precisely because of its managerial capacity in cost/effectiveness terms. A treasure that other countries around us do not have (without going any further, France).

Of course, it is necessary to continue in the activities of public/private collaboration, the most important of which is administrative mutualism, while others possibly have less future.

Surely the current situation (health insurance as predominantly duplicated) is not the best for the country in terms of efficiency, but an orderly change to overcome this situation is hard to see.

2. A certain urgency to modify the rates upwards, in order to preserve the operating accounts of the suppliers

Graduation in the modification of premiums, but also taking into account the urgencies of providers and professionals.

3. Bad mental health solution

Within health insurance, mental health is especially poorly resolved. This is an issue that will need to be addressed, as the incidence of mental illness, especially among young people and in the aftermath of the pandemic, is a pressing issue.

4. Possible improvements in efficiency

Efficiency improvements are not only necessary in the public system, there is also room for efficiency improvement in the private system. This is also closely related to the way in which the professional and the center are remunerated. We have to place more emphasis on value-based compensation and not so much on simple quantity.

5. Quality variability

It is evident that the improvement in private assistance took place fundamentally in the large urban centres. Digitization and telecare can greatly contribute to improving this situation of inequality. On the other hand, using the freedom of choice, something consubstantial with health insurance, people move in search of the best care.