Section 1: Introduction
Section 2: Hong Kong Health Insurance Benefits
Section 3: Hong Kong Health Insurance Services
Section 4: International Health Insurance Benefits
Section 5: Health Insurance Premiums
Section 6: Conclusion
The way in which a group’s health insurance premium is calculated will differ between Hong Kong local insurers and international insurers. Simply put, local insurers review the volume and value of claims for each company and then associate a premium required to ensure the specific corporate account remains profitable in the future. This practice is known as experience rating and would mean that the more claims made by the employees of a company the higher the premiums are likely to be in the future. Unfortunately for companies, the reverse is not true and less claims does not mean fewer premiums.
International Health Insurance providers, on the other hand, tend to quote premiums for new and renewal business on a community rated basis which means that no matter how many claims are made by the employees, the premium will reflect the specific demographic and cover rather than the experience, and that calculation is based upon the overall value of claims made by the insurance company’s clients.
Only when a group reaches the status of “large corporate” will it find itself being subject to experience rating by international health insurance providers.
Although these basic principles apply, there are other factors insurance companies consider which include medical inflation, environmental and market influences and their operating costs. In theory, this should mean that there is very little that can be done to reduce costs or a limited amount of negotiation that can be carried out by a company when reviewing premiums. In contrary, however, companies do have the ability to make dramatic saving with the average discount being almost 20%.
Hong Kong companies pay too much for their insurance and rarely take advantage of the premium reductions available in the market. Less than 10% of group administrators will “shop around” or compare the market at renewal and 96% of companies will renew with their existing insurer year after year even if higher levels of cover and service and lower premiums are available.
Even if an insurance broker represents the company, these statistics remain constant in the main and according to many insurance insiders, renewal quotes with many brokers has become a paper exercise with little or no negotiation taking place to manage costs.
The result for Hong Kong companies can be dramatic; many will be presented premium increases each year instead of price reductions and most will be provided with the same benefit levels that do not account for industry improvements or medical inflation as it is statistically likely that the renewal invitation will be accepted without question.
The few that do compare the market each year and employ an insurance broker that specializes in the provision of corporate health insurance can take advantage of higher levels of cover at lower prices. Average savings are almost 20% when this exercise is carried out and many brokers will have negotiated discounts of up to 45% for groups and exclusive offers with insurance companies when they arrange their insurance through them.