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Analysis: Rising liability awards

Asia is no longer the benign liability environment that it once was. Michael Griffiths, regional director of healthcare at Aon Singapore, explains why.

Imagine you are walking along a footpath in a suburban street somewhere in Asia. Not far ahead of you is a woman on a bicycle, riding on the same footpath. As she rides towards you, a bundle of overhead cables from an adjacent building site falls suddenly on to the street and hits the cyclist, knocking her to the ground.

You rush forward to assist, as do workers from the building site, and everyone is relieved to discover that the cyclist has not been seriously hurt. She is taken to hospital for a check-up, perhaps some treatment for cuts and bruises, but overall it seems that she has had a lucky escape. You would imagine that the owners of the building site will cover the cost of her check-up, repairs to her bicycle, and possibly offer a small apology gift, and that would be the end of the matter.

If this had happened in Australia or the US where people tend to be more litigious, the courts may award higher damages, but here in Asia, people generally do not like to sue, and the courts are generally far more conservative. Well, maybe they used to be, but times have changed.

On 15 October 2009, Ms Siew Pick Chiang, a 42 year-old woman, was cycling along a public path in Singapore, when she was struck by a bundle of overhead cables that had fallen from a building site. Ms Siew suffered only minor physical injuries, but the post-traumatic stress disorder she developed following the accident was so serious that she was hospitalised on at least 18 occasions, and at one stage remained in hospital for over two years. In 2012, she brought legal action against an engineering and construction firm, the main contractor of the building site, seeking damages of S$26 million (US$18.3 million). This amount included over S$13.6 million in medical costs alone, as well as claims for the cost of care givers, loss of income, and S$1.25 million in taxi fares.  

On 1 December last year, the Singapore High Court handed down its judgment. The defendant was found to be fully liable for the injuries suffered by Ms Siew, and was ordered to pay a total of S$8.645 million in damages. This represents the largest ever personal accident award made by the Singapore Courts, nearly S$6 million higher than the previous high water mark.

In our view, this case represents only the latest example of a much wider trend in Asia – that increasing amounts of damages are being awarded by courts.

An award of damages tends to reflect, among other things, the cost of living in the country where it is made. In Asian countries such as Singapore, Japan, Hong Kong, and Korea, the cost of living is now amongst the highest in the world. When it becomes possible for an individual to incur S$13.6 million in medical costs and S$1.25 million in taxi fares, it is inevitable that liability awards in those countries continue to rise.

Insurance brokers can sometimes make for gloomy dinner companions. Part of our job is to highlight to clients the scale of the risks they face, and how and where things could go wrong. Quite understandably, some of my clients respond with scepticism when I tell them that Asia is not the benign liability environment that it once was. They ask to see the proof. In my view, the Singapore High Court has just provided it.

Posted on: 23/02/2017 UTC+08:00


News

The A$3.5 million (US$2.7 million) share purchase plan from medical diagnostic imaging services provider Capitol Health has been significantly oversubscribed and the company will increase acceptances to A$5.2 million.
Singapore-listed medical supplies group QT Vascular has secured up to S$20 million (US$14.3 million) funding from investment group GEM Global Yield Fund over the next 30 months via a subscription for shares in the company. Initially GEM’s capital commitment is for S$10 million, and QT Vascular can opt for a further S$10 million on the same terms.
Cayman Islands-incorporated G Medical Innovations, which develops mobile health technologies, is to raise A$10 million (US$7.7 million) on the ASX with the ability to accept oversubscriptions for a further A$2 million. Otsana Capital is lead manager.
Hong Kong-listed healthcare company China Wah Yan Healthcare has reported an improved net loss for 2016 of HK$338.6 million (US$43.6 million) on revenues for the year were up 52.6% to HK$194.2 million.
Healthcare furniture and equipment manufacturer LKL International has reported a 48.3% decline in profits for the third quarter of the year to M$1.2 million (US$271,000) on profits that fell 37.7 to M$7.3 million.
New Zealand-based cancer diagnostics company, Pacific Edge (PEB) has received an additional grant of up to NZ$3 million (US$2.1 million) to its existing growth grant from Callaghan Innovation to enable further research and development of its edge cancer diagnostics technology.
Dublin-based and ASX listed IT healthcare company Oneview Healthcare has announced that Lancaster General Health (LGH), a 663-licensed bed, not-for-profit health system, and member of the University of Pennsylvania Health System, will use its patient care system.
As expected Mega Medical Technology, which manufactures and trades in dental prosthetics in China, has reported a loss of HK$20.3 million (US$2.6 million) for 2016 on revenues that rose 88.2% to HK$188.1 million. At the end of January it issued a profit warning.



Analysis

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The renounceable non-underwritten 11-for-200 rights issue for SGX-listed private healthcare provider Health Management International (HMI) has received strong interest from investors. It had a 145.7% subscription rate, raising gross proceeds of S$18.5 million (US$13.1 million).
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Asia is no longer the benign liability environment that it once was. Michael Griffiths, regional director of healthcare at Aon Singapore, explains why.
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Real estate group OUE has made a S$62.9 million (US$44.4 million) takeover bid for financially troubled International Healthway Corporation (IHC), a Singapore-listed integrated healthcare services and facilities provider.

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