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Why My Premiums Increasing ?
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Why Are My Premiums Increasing?
 
 
 

Every year, the cost-conscious among us may notice that the cost of their health insurance has gone up. Although they may call their insurance agent demanding to know why, most people will find that an annual increase in premiums is a regular and unavoidable occurrence in the world of medical insurance, and the reasons for this are numerous. Let's explore why you may be in store for a premium increase, and what you can do to minimize the financial impact to you and your family.

There are both regularly and irregularly occurring causes for insurance rates to rise. Often times cost increases for medical care at hospitals and doctors’ offices can be passed on to insurance. For example, as recently as February 1st, 2013, one of Hong Kong's best private hospitals reported that it was raising general practitioner consultation fees by 18%. This is all part of the expected inflation of prices worldwide due to changes in the global economy, and a good reason why those who plan on using private medical providers should be the most concerned with increases in insurance premiums.

Rate hikes can also be caused by over-prescription of unnecessary medications and medical procedures. For instance, Hong Kong doctors are twice as likely to perform a caesarean section for a birth than doctors in the U.S., the U.K. or Australia. As doctors perfect the system of performing frivolous procedures, they also inflate the amount of insurance money that is paid to them.

Increased premiums are also the result of litigation. It is not only medical patients that are insured. The doctors themselves also have insurance to protect them against malpractice suits. Depending on each country’s legal system, the amount of money paid out by insurance companies due to litigation can be substantial. Hong Kong does allow for patient compensation for medical malpractice, and again, if high costs are incurred by insurance companies, premiums may rise.

Demographic changes are another reason why medical costs, and thereby insurance costs, have gone up. Every generation is living longer than the last, and this raises medical costs over time as more people seek new medical technologies and drugs to keep healthy while living longer. With age, people are developing more chronic conditions that can slowly drain insurance companies over a long period of time. There's no sign of this trend reversing, so expect demographics to continue to affect insurance premiums for some time to come.

Irregular reasons for rate increases could stem from catastrophes such as earthquakes, hurricanes, floods or tsunamis that have affected an insurance company’s bottom line in the previous quarter. The underwriters who determine premiums may then have to defer the company's losses by raising premiums across the board. Actually, in times of stability, the fierce competition that exists between different insurers on the market causes them to keep rates very low, sometimes to the point that plans are under-priced. Then, when a big event occurs, such as one of the catastrophes mentioned above, insurance companies have a chance to raise premiums across the board without consideration for competition. Insurance companies will essentially work together during these periods in order to raise premiums.

Politics and new laws are another unpredictable cause of higher insurance premiums. When a government decides tto institute new laws that reform the healthcare system, this can have a large influence on insurers. Some developed countries are now requiring citizens, by law, to purchase insurance. At first glance this would seem like a plus for insurers, but in actuality there are normally so many rules about who insurers must cover, how much coverage must be provided and the rates at which insurers can charge their customers, that costs can go up significantly. Although Hong Kong does not currently mandate that its population have health insurance, the big international insurers that exist in Hong Kong are still affected by such laws around the world.

So how can you try to get lower premiums each year? First of all, it's important to be aware of your policy renewal date, as well as the date on which premiums will be raised. In Hong Kong, many private medical insurance policies will see a premium increase at some point throughout the course of a given year. In fact, for the first three quarters of 2012, general insurance companies in Hong Kong reported that their premiums rose an average of 11.3%. Additionally, a number of major insurers will be increasing premiums as of April 1st, 2013. In order to avoid the rate hike, it is necessary to renew your policy before that date of increase to lock in the current, lower rate. For this reason, it's also important to maintain communication with your insurance agent. They will be the best source of information on any potential changes to your policy. When dealing with premium increases, it is beneficial to deal with an insurance broker rather than with an agent at an insurance company. Since brokers themselves are not primarily concerned with the interests of any particular insurance business, they are able to focus on the needs of their clients and advise them with only the client's best interests in mind.

The factors that affect the costs incurred by insurance companies worldwide are numerous and sometimes unpredictable. Whether we like it or not, insurance premiums tend to increase; there are just too many factors driving prices up, both globally and locally, and those factors force medical providers and insurers alike to raise their fees. The only thing that can be done to minimize these financial impacts is try to control your individual costs by keeping informed of when premium increases are occurring, and maintaining effective communication with your insurance provider.

Travis Jones
www.pacificprime.com/hong-kong/

 

 
 

 

 


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