You might experience an increase in your annual premium cost when you come to renew your medical insurance and question why this is the case, particularly if you have not made a claim.
There are in fact a whole host of reasons why your medical insurance premium will have increased, and we’ll explain a few of them here. We’ll also give you tips on how to reduce your premiums when you buy from a medical insurance provider for the first time or at renewal.
There are three main reasons that your premiums will rise: medical inflation, claims and insurer expenses.
These are the costs associated with providing medical treatment, and they rise rapidly year after year. The increases are caused by a whole range of factors including:
Supply and Demand
There’s always a high demand for healthcare, especially as the world sees a rising incidence in chronic diseases like diabetes, especially in countries such as China and regions such as the Middle East.
Add this to the fact that the global population is rising, and we’re all getting older and living longer. In many countries the population is rising and with increasing wealth, more people are demanding high quality healthcare.
Factors such as these all add up to a higher demand for medical services, pushing up the cost, which then puts pressure on insurance premiums.
The huge technological advances made in medicine every year such as new drugs, procedures and equipment, are leading to better outcomes for patients but, in many instances, increases to the cost of treatments as well.
This again adds to the pressure on insurance premiums, especially where a medical facility that has invested in technology (such as a new piece of equipment) pushes its use to justify the investment.
Claims (incidents and costs)
Insurance companies need to make money to operate as a viable business. If an insurance provider experiences a higher-than-expected level of claims over a year they may have to adjust the premiums—either on an individual policy level or across their whole book of business—to make up any shortfall.
A range of factors can affect claims.
People living healthy lifestyles will usually make fewer claims than those who don’t. Age significantly affects the incidence of claims. Some parts of the world also have a relatively high ‘culture of claiming’, in other words, a high utilization of their health cover. Fraud is also an issue – either by policyholders or medical providers claiming for excessive fees or charging for non-administered procedures.
Providers work hard to reduce the incidence of claims but often need to raise premiums to combat annual upward pressures.
Medical insurance provider costs
Medical insurance companies have to factor in their business expenses. Costs of salaries, technology, premises, insurance, suppliers and a whole host of other costs will usually rise.
Like any business, insurers will continually look at efficiencies but a degree of these increased costs will inevitably need to be passed on in the form of higher premiums.
Managing your premiums
There are ways you can reduce the money you pay for cover. Here are a few tips to help you:
- Choose a higher deductible or excess – this will reduce the money your insurer will have to pay out when you claim, so your premium will reduce accordingly
Don’t pay for what you don’t need – make sure you carefully select your cover so that it doesn’t include anything you don’t need. Obvious examples are covers relating to pregnancy if you are male or dental cover, for example, if you have insurance for this under another policy. This point, however, also applies to benefit levels – if you don’t feel top-level cover for cancer is needed, for instance, choose an option with a lower benefit limit
- Pay annually – you may receive a discount (or at least you won’t incur any interest charges) if you pay your premium in one lump sum rather than instalments
- Shop around – research a range of insurers to get the cover you need at a competitive premium.
It’s never welcome to receive your insurer’s renewal letter, only to find that your premium has risen yet again. It can help to understand why your premium may have gone up, but it’s also useful to know how to make sensible choices to make any increases manageable.
Riviera-Expat is a specialist insurance broker operating in the International Private Medical Insurance market. We source quality health insurance cover for expatriates around the world every day. Contact us today to find out more about international health insurance and find the right plan for you and your family.