No pain, no gain

Staff reporter

Several insurers in the city have raised their premiums for plans under the Voluntary Health Insurance Scheme due to a sharp rise in healthcare costs with some increasing their fees by over 10 percent.

And policy holders should be prepared to fork out even more over the next few years as medical inflation continues to rise, an insurance veteran says.

The VHIS was launched in April 2019 to alleviate pressure on Hong Kong's public healthcare system and as of the first quarter of this year, the number of VHIS policies had exceeded 1 million.

There are generally two kinds of plans under VHIS. The standard plan is based on standards prescribed by the government while so-called "flexible" plans offer more benefits but at higher premiums.

Policy holders in the government-backed program can enjoy annual tax breaks of up to HK$8,000 per person, a benefit that other private insurance plans don't have.

However, at least five insurers have raised their premiums for VHIS plans this year amid the inflationary environment.

Last month, FTLife Insurance hiked premiums for its two flexible plans by 8 percent and 10 percent respectively, blaming inflation.

FTLife said this was the first increase since the program was launched in 2019.

Earlier this year, Bupa, Cigna, Sun Life, and Manulife all raised the premiums for their VHIS plans, according to data from 10Life, a platform that provides insurance product ratings and comparisons for customers.

Bupa hiked the premiums for one of its flexible plans, Bupa MyFlexi VHIS, by 0.3 percent to 11 percent while another flexible plan, Bupa Hero VHIS, also saw an increase of between 4.5 to 5.8 percent, data from 10Life shows.

Bupa stressed that the hike was accompanied by coverage enhancements, adding that it had lowered the premiums for its standard plan by 0.9 percent in December last year.

Cigna has raised the premiums one of its flexible plans, Flexi Plan (Superior)-Semi-Private Room, by 6.5 to 10.7 percent, according to the platform.

Manulife has hiked the premiums by 6 to 7 percent in two of its flexible plans over the past year but it also increased the coverage limit. Premiums for the standard plan remain unchanged.

Meanwhile, Sun Life raised the premiums by 6 percent for one of its flexible plans in April this year, according to 10Life.

While the hikes have been largely due to inflation, insurers may have also been forced to increase the premiums because of a recent rise in claims, says Iris Lun, co-founder and chief actuary at 10Life.

There were basically no claims in 2019, the first year of the launch of VHIS, while there are also not many claims in 2020 when the Covid pandemic broke out as people were reluctant to go to hospitals unless it was urgent, Lun says.

But as the pandemic eased, non-urgent healthcare claims have increased and this has put more pressure on insurers, especially those that have less stringent underwriting controls or relatively lower premiums, Lun says.

Looking ahead, she expects premiums for VHIS plans will increase by 5 to 10 percent annually amid medical inflation.

Insurers that have not increased premiums for such plans include AIA, AXA, Prudential, and FWD. But that could change in the future as they take a closer look at various factors including inflation, the claim rate and renewal rate.