Published: Wednesday July 2, 2008

Sagicor Life Jamaica Limited says it has 55 per cent lock on the health insurance market, but is looking to snag a much larger share of the business by making a second go at landing the contract for administration of the government employee health scheme.

Sagicor Life Jamaica's marketing manager Karl Williams said Tuesday that the Government Employees Administrative Services Only (GEASO) scheme, which offers coverage to some 67,000 public sector employees and another 110,000 of their dependents, could boost the company's market share by about 20 per cent.

Dominant health provider

But, conversely, it would deny business to rival Blue Cross of Jamaica, whose core operation is in the health market, whereas Sagicor Life is a diversified health insurance company, chiefly engaged in life underwriting.

But, said Williams, "that's not the reason we bid. What's important is that the contract actually went to tender after so many years."

Industry sources have confirmed that Sagicor Life Jamaica is the dominant health insurance provider - and, indeed, dominant across the segments it operates - followed by Blue Cross and Guardian Life Limited. The GEASO contract would also propel Guardian back into the limelight as a serious health insurance provider - though industry sources also say the Trinidad-owned operation is already making inroads through Medecus.

Planning bids

All three companies, which had the top three bids for the GEASO scheme when it was first put to tender in 2006, are planning to bid for the contract again, although Guardian has only tentatively confirmed its participation.

"We have an efficient system of responding to tenders, so the cost, or time taken to put together a bid is part of our standard operations, which would not be an adverse factor in this exercise," said Alicia Foster, vice-president of the employee benefits division, sidestepping comment on the cost of putting together such a bid.

"In terms of confidence, once we have reviewed the document, and understand the terms we will decide our next step." Still the company said there was a "very strong likelihood that we will participate in any new tender proposition."

GEASO is a $2-billion scheme that Blue Cross has managed for an annual fee, at last report, of about $200 million under a special arrangement with the Government. But, in 2006, under pressure from the insurance market and the Office of Contractor General, the contract was put to competitive tender.

Sagicor Life, then LOJ, emerged with the winning bid of $148.93 million in mid-2007. Blue Cross was second with a bid of $216.96 million, but also wanted a 5.0 per cent share of profit; while Guardian's bid was $309.25 million.

But before the contract could enter its final phase - Cabinet ratification - there were howls of protest from the public sector unions, who claimed that the finance ministry's selection was flawed and that the more attractive option was Blue Cross.

Sagicor Life Jamaica has opted not to make a public objection to the developments.

"Our only intention is to bid again," said President Richard Byles when asked why the company had chosen not to contest the decision to retender the scheme.

Added Williams: "Until ratified in all the steps - not 90 per cent, but the full 100 per cent - we don't consider ourselves as receiving the bid."

Keeping eye on

Still sources say that privately, Sagicor Life is keeping watch on the GEASO monitoring committee and whether the unions will have any sway in the decision when the new round of bids are in.

Publicly, Williams said, when asked whether the company was concerned: "We have a good relationship with some of these unions. We are not going to get into a quarrel with them."

The Sagicor Life Jamaica bid would have seen government employees paying $38 per month each as their contribution to the scheme under the Sagicor/LOJ proposal, and $45 per month under the Blue Cross bid.

But the protests against appeared to have centred on the actual pay-outs that subscribers would have to finance from their own pockets when seeking medical care. There were also concerns that Sagicor Life's network of doctors and health facilities was not as expansive as Blue Cross.

Under the prevailing Blue Cross plan, which was extended until the new contract is decided, beneficiaries pay 20 per cent on a doctor's visit, for example, while the insurers pay 80 per cent.

The ratio under the Sagicor plan was expected to be higher for subscribers. But asked how much, Williams was evasive.

"My memory does not take me back there," he told Wednesday Business.

The finance ministry has invited new bids, but, up to Tuesday, all the documentation required had not been made available, Williams said, although the ministry had indicated that they would have been by June 23.

The tender closes in less than two weeks on July 11.


Source: Jamaica Gleaner
http://www.jamaica-gleaner.com/gleaner/20080702/business/business2.html