Lithuania's private medical insurance (PMI) premium income in 2018 was EUR 30.37mn (USD 35.86mn), showing strong growth each year.
This figure represents a 23.5% growth from 2017 when premium income was EUR 24.59mn (USD 27.71mn).
PMI, in the official category ''supplementary voluntary health insurance'', is categorised as a non-life class in Lithuania; both life and non-life companies, however, may write such business in exactly the same way.
According to market estimates, up to 90,000 lives are now covered, overwhelmingly in employee groups: less than 1% of premium relates to individual PMI.
PMI cover in Lithuania is not really intended to pay for the more complex or life-threatening conditions (best dealt with by the public sector); fewer than 30% of contracts reportedly include inpatient treatment. The primary purpose of PMI in Lithuania is seen as a supplement to employee wages, covering relatively minor costs such as doctor fees and complementary therapies.
A feature of many contracts is so-called "free limits", where essentially the insured can use the insurance to pay for many health products and services. The premium paid for a free limit is basically the same as the sum insured for it, although there are tax advantages for the employer. Employers can regard PMI premiums as a tax-deductible company expense for corporation tax purposes, as long as the amounts (along with pension contributions and savings-related life insurance premiums) do not exceed 25% of gross annual salary.
The main buyers of PMI have been foreign or joint venture enterprises, although since the introduction of improvements in tax treatment and the economic development, more and more Lithuanian companies, large and medium-sized, are buying cover. PMI has now become an essential part of the employee benefits package for professionals in accountancy, IT and data services companies. A growing number of employers are buying cover for the whole workforce, both white and blue-collar.
While it has grown in popularity, in 2019 only around 30% of medium-sized and larger employers had bought PMI, less than 5% of small employers (with fewer than 50 employees).
As these services often have only a vague connection to true healthcare, there is some doubt about their tax status, and some insurers are reducing the scope of free limits to those which are obviously health-related.
Insurers report high loss ratios (about 72% in 2018), complaining that it is difficult to make money from PMI; claims frequency is very high: insurers have had to introduce measures to control costs and try to stop over-treatment by clinics.
Only one insurer offers PMI to individuals: after a few years in the market, it is not considered a success even though it is still offered in 2019.
Lithuania's strong growth in the private medical insurance industry will undoubtedly be welcomed, but only by the insurer who is ready to take advantage of it. Discover how your insurance company can take advantage of developments like this with our life insurance market reports.