Bermuda healthcare system — already among the world’s most expensive — is “unsustainable” on its current trajectory of rising costs, according to the boss of a leading health insurer.

BF&M Ltd CEO John Wight said the demographics of an ageing population are adding to the stress on healthcare and the Island needs to reverse the loss of thousands of expatriate workers in recent years to support the healthcare system.

And he highlighted one of the factors driving the Island’s healthcare costs ever higher that could easily be avoided — people using the Emergency department at King Edward VII Memorial Hospital for non-emergency problems, thereby costing the healthcare system multiples of what it would have cost, had they gone to a doctor.

In an interview, Mr Wight — who is just two months short of ten years in the CEO’s role — also spoke about how diversification by business line and geography has helped BF&M to maintain consistent profitability in a five-year recession, during which the firm actually managed to increase its Bermuda-based staff by five.

Last month, BF&M announced profits of $17.5 million for the first half of this year, up by $7 million on the year before. In addition to health insurance, the company provides property, life and auto insurance, some annuity products, and is a pension administrator. It also has some real estate interests.

The firm has expanded across the Caribbean region in recent years and now operates in 15 jurisdictions, with the main sources of business outside Bermuda being the Cayman Islands, Barbados, the Bahamas and the US Virgin Islands.

The 2012 acquisition of Cayman-based Island Heritage helped the company realise its strategy of becoming a major regional insurer in the Caribbean.

Of the 450 staff employed across the BF&M group, 155 are based in Bermuda.

Health insurance is the standout issue for local insurers, according to Mr Wight.

“The trends are not working in Bermuda’s favour, because of the low birth rate, the ageing population and about 5,000 fewer people,” Mr Wight said. “So there’s more pressure on the Island to fund its healthcare services and a new hospital with fewer people than we had a few years ago.

“Bermuda is the second most expensive jurisdiction in the world for healthcare services. We have great access to excellent healthcare, but the downside is that the cost of healthcare is unsustainable in the long term.”

While healthcare costs are rising all over the world, Mr Wight said Bermuda’s demographics made the Island’s situation particularly serious.

“It’s not just the fact that 5,000 people left — it’s also the fact that most of them were in the healthier 25-50 age group, who, in many cases, subsidise an ageing population.”

A story on the pension shortfall in The Royal Gazette this week quoted Government as saying that 2,256 residents would turn 65 this year — meaning approximately one in every 28 people becomes a new senior — highlighting the phenomenon of the ageing population.

Mr Wight said there was little indication of a strong economic recovery. “The only way we can get back to sustainable growth in GDP is from the return of as many of those 5,000 people as we can get back,” he added.

“Government, we know, is doing everything possible to work with the private sector to open up the economy, so we can attract more foreign capital and workers, which would benefit all Bermudians.”

Mr Wight said people using Emergency for minor problems might be doing so because is there is no co-pay requirement, while a small fee is charged for a doctor’s visit. However, the result was higher premiums for everyone.

“If a person goes to Emergency, the range of claims, based on five different billing codes at KEMH, is between $350 and $850 with no co-pay by the person,” Mr Wight said.

“A family doctor visit, for example — it varies from doctor to doctor — may cost $90, with co-pays in the $25 to $30 range.

“The individual sees the trip to Emergency as being ‘free’ because there is no payment out of pocket, but the cost to Bermuda’s healthcare system is much higher than if they went to their GP.”

BF&M has achieved impressive consistency in its profitability over the years, having generated a return on equity of more than ten percent for 13 years in succession. It has rewarded shareholders too and earlier this year raised its quarterly dividend by ten percent. Despite this track record, its shares trade on the Bermuda Stock Exchange at only about 60 percent of book value, Mr Wight said.

Mr Wight puts the company’s success down partly to the diversification, which means that if one business line, or island, has a bad year, then other parts of the business will be able to compensate. Much of the credit also belongs to its employees, he added. The company takes development of its human resources seriously.

“We have a strong workforce and culture in all of the jurisdictions in which we operate,” Mr Wight said.

BF&M was the first company in Bermuda to acquire the Investors In People Gold standard and has made The Bottom Line magazine’s Top Ten Employers list in each of the five years since it was launched, finishing top on one occasion.

Mr Wight said the firm took an interest in their employees’ lives outside work, encouraged them to support good causes, gave them time to attend their children’s sports days, and in general nurtured a family atmosphere at work.

The company also donated $250,000 to KEMH’s new Acute Care Wing.

“We take great pride in being able to share the company’s successes by giving back to the community which has been so good to us for so many years,” Mr Wight said.