Hong Kong continues to have a major influence in terms of our Southeast Asian data. The country was again ranked as the second most expensive location in the world for international private medical insurance (IPMI), and this year’s IPMI data shows that Hong Kong’s inflation still tracks much higher than the global average.
The lower IPMI inflation in 2017 is one that mirrors the movement in China and Singapore, two countries we view as being on the more expensive-side of Asian insurance premiums.
In 2017, Hong Kong recorded an IPMI inflation of 8.8% and a year-on-year Consumer Price Inflation of 2.2%. This continues to illustrate that Hong Kong international private medical insurance prices are not influenced by or linked to consumer prices.
Furthermore, despite the drop in premium inflation in 2017, the CAGR (Compound Annual Growth Rate) of premiums from between 2009 and 2017 was 9.98%, meaning on average, premiums have actually increased over time, despite periodical drops.
Inflation by insurer in Hong Kong
The movement of inflation rates per insurer in Hong Kong goes a long way in explaining the country’s average IPMI inflation decrease. Across the board, most of the eight insurers looked at in our report have seen their IPMI inflation rates decrease; the biggest drops being seen by IntegraGlobal and Cigna Global. Of the three insurers whose inflation rates increased, the movement was minimal by comparison to the rate reductions of the others.
Hong Kong inflation drivers
Making plan adjustments to meet consumer expectations while still remaining competitive and profitable remains a priority for insurers in Hong Kong. In addition to ongoing competition and market influences, the cost of international private medical insurance in Hong Kong continues to be impacted by many of the same drivers seen in previous years:
- Technology: The Insurance Authority has repeatedly encouraged insurers and intermediaries to apply insurance technology innovations to improve data analysis, and ease pressure on premiums paid by consumers.
- Strong demand continues: Figures from an article posted in mid-2017 found that the number of private or group medical insurance policies in Hong Kong rose by 300,000 in the past year, as the country turned to private health plans to care for an ageing population.
- Overutilization: In the same article on rising insurance policies, the Hong Kong Federation of Insurers reiterated that pressure on premium prices could be eased if consumers opted for less expensive day care clinics than being admitted to a hospital ward.
With regards to the two new inflation drivers we discussed earlier in this report, Hong Kong too has seen significant developments in the following areas that look set to play a big part in the cost of insurance in the country moving forward.
- Regulation and compliance: June 2017 saw the establishment of the Insurance Authority in Hong Kong to modernize the regulatory infrastructure of the industry, and provide better protection for policyholders. Early actions have included a focus on mandatory re-licensing and annual training.