Trend rate figures represent the percentage increase in medical plan costs per employee – both insured and self-insured. Knowing estimated costs in advance can help organisations budget and adjust their benefits philosophy in response, ensuring programs are sustainable.
This year’s report projects APAC will experience the second highest year-over-year trend rate increase after the Middle East and Africa, which has the highest trend rate of any region at 15.5 percent.
Forecasted
Medical
Trend
Rate
from
2024
to
2025 |
||
|
2024 |
2025 |
Asia
Pacific |
9.7% |
11.1% |
Global |
10.1% |
10.0% |
Europe |
10.4% |
8.9% |
North
America |
7.6% |
8.8% |
Latin
America
and
Caribbean |
11.7% |
10.7% |
Middle
East
and
Africa |
15.1% |
15.5% |
“The biggest rise in medical utilisation and inflation are now behind us in APAC, but recovery in insurer profitability is expected to keep medical trend rates in the double digits for 2025 and 2026,” said Alan Oates, head of global benefits for Asia Pacific at Aon.
“The high medical trend rate can also be attributed to a higher incidence of cancer and chronic conditions than before the COVID-19 pandemic. Managing the impact of medical inflation therefore should be a top priority for all southeast Asia markets and especially important in New Zealand, Papua New Guinea, Thailand and Vietnam, which are seeing 50 to over 100 percent increases compared to last year,” Oates explained.
The survey further revealed that prescription and specialty medications, including weight loss medication, innovations in medical technology, and geopolitical factors, are significantly impacting medical trend rates in APAC and around the world. In addition, support for emotional health as the fastest-growing claim in Aon’s APAC client portfolio, wellbeing initiatives designed to mitigate stress, along with other plan enhancements, are also contributing to the double-digit medical trend.
“Although
most
insurers
are
still
raising
premiums,
we
are
seeing
a
slight
drop
in
some
markets
where
risk
appetites
are
returning
among
insurance
providers
that
were
quick
to
take
corrective
measures
in
previous
renewal
periods.
As
these
insurance
providers
can
now
offer
competitive
pricing
terms,
we
are
encouraging
clients
to
test
the
market
as
there
is
increasing
value
in
doing
so,”
said
Marina
Sukhikh,
professional
services
industry
practice
leader,
global
benefits
for
Asia
Pacific
at
Aon.
How
are
Companies
Addressing
Rising
Costs?
Wellbeing
programs,
plan
design
changes,
alternative
financing,
data
and
analytics
and
flexible
benefits
are
among
the
top
strategies
employers
are
expected
to
undertake
in
2025
to
affordably
promote
a
healthy
workforce.
Sukhikh said, “Aon has observed growing co-investment in wellbeing initiatives by employers and insurers. Greater investment is being matched with greater scrutiny into investment return, and wellbeing programs are increasingly being integrated and aligned with prevention strategies. For example, more initiatives are targeting physical inactivity, poor stress management, hypertension, high cholesterol and other risk factors driving chronic conditions that lead to adverse future claims.”
“We are encouraging clients to seek a more integrated value-based outcome from insurers where they are cooperating in the sharing of data, investment in wellbeing and offering creative solutions for design and financing. Sophisticated analytics tools, such as Aon’s Health Risk Analyzer, are helping companies leverage a growing volume of multi-source data, not just to identify and mitigate today’s risks but to accurately predict and prepare for the risks of tomorrow. Technology is helping us identify under-served populations and anticipate opportunities faster than ever,” added Sukhikh.
According to Aon’s 2024 Global Benefits Trends Study, employers in around 60 percent of countries are expected to use flexible benefit plans to address diverse workforce needs while controlling overall benefit costs. Meanwhile, one in three are actively considering alternative benefits financing arrangements, such as multinational pooling, global underwriting and captives.
“More than at any point in the last 10 years we have observed employers taking steps to reduce plan design due to affordability. Flexibility and choice have been a valuable tool in design change because employees generally place a greater value on shorter-term flexibility and choice than they do on longer-term core benefits. Alternative funding will not materially reduce cost, which is generally determined by claims and scale, but it can smooth cost volatility over a longer period than is possible with direct insurance and that is helpful in this volatile market,” Oates added.
Read Aon’s 2025 Global Medical Trend Rates Report.
About
the
report:
The
report
is
based
on
insights
from
112
Aon
offices
that
broker,
administer,
or
advise
on
employer-sponsored
medical
plans
in
each
of
the
countries
covered
in
the
report.
The
findings
reflect
the
medical
trend
expectations
of
Aon
professionals
based
on
their
interactions
with
clients
and
carriers
represented
in
the
portfolio
of
the
firm’s
medical
plan
business
in
each
location.
As employer-sponsored medical plans become a larger part of total rewards spend and pressure mounts to accurately forecast and manage costs, this report is a valuable resource for organisations to plan global budgets and benefits strategies for 2025 and beyond.
Read Aon’s 2025 Global Medical Trend Rates Report.
Hashtag: #Aon
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