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Hong Kong Medical Insurance Inflation Remains Among the Highest in the World

Hong Kong Medical Insurance Inflation analysed by Pacific Prime Hong Kong

Posted on Nov 28, 2014 by Alexander Nellist

With regards to International Private Medical Insurance (IPMI) Hong Kong has the highest cost of private high end healthcare of any country in the world after the United States. Housing a first class private healthcare system that caters to a large expatriate and high net worth population, Hong Kong has a constant demand for high class medical services particularly in private hospitals. The mix between supply and demand may have had an impact on the rate of IPMI premium inflation within the city. As a global hub, Hong Kong's insurance providers are aware that striving to keep premiums low and competitive is paramount, but with healthcare costs in Hong Kong rising, IPMI premiums have been forced to follow suit and private medical insurance inflation has remained prevalent as a result in the city. Furthermore, Hong Kong recently recorded the largest premium increases since 2010 not only in the South East Asian Region but among countries throughout the world.

Lowered growth in the net number of expats relocating to Hong Kong has in the past seen inflation slowed, exemplified in the drop from a rate of 13.3% in 2010 down to the rate of 7.5% today. Inflation rates in Hong Kong are unlikely to change position as highest among the world, as there remains a growth in high net worth individuals even if the number of newly arriving expats falls.

Insurance providers are also seeking to influence some control over the rate of inflation in Hong Kong. Some insurance providers are using directionality to control where treatment is being undertaken in order to manage costs. This can come in many forms such as co-pays or excesses, and can also take the form of directed networks whereby policy holders are only allowed to use certain doctors and hospitals. Bupa’s recent purchase of QHMS is one example of a very strategic move which may have long term benefits. 

Although Hong Kong medical insurance 2014 inflation rates revealed negative figures from Interglobal plans at -4.4% and a relatively low increase from Allianz at 4.3% increase, Aetna, Bupa Worldwide Health Options and William Russell each still demonstrated rates above 10%, contributing to Hong Kong retaining the highest rate of  inflation among the countries analysed for 2014.

As can be seen from the figures below, there has been a drastic reduction in the rate of inflation in the Hong Kong Market since 2010, where premium inflation rates showed substantial drops over the next five years. The city however remains highest on the table with the highest inflation rate in the world, a 7.5% 2014 average, totalling a five year average of 10.1% and featuring 1.7% above the world’s recent five year average. The next highest country follows with a significantly lower average with Singapore’s 8.9% five year rate.

The demand for high quality medical services amongst expatriates and high net worth individuals in an increasingly expensive city is still a major factor that distinguishes Hong Kong’s five year rate average of inflation remains when compared to the rest of the world. 

 

HK

China

SG

Thai

Ppines

Indo

Dubai

UK

Kenya

Brazil

Avg

2010

13.3%

7.3%

7.3%

6.9%

6.9%

6.9%

6.9%

7.7%

6.9%

6.9%

7.7%

2011

10.4%

10.6%

11.8%

9.2%

7.2%

11.0%

9.2%

11.5%

9.1%

11.4%

10.1%

2012

11.3%

11.2%

10.1%

8.8%

8.8%

8.8%

9.9%

8.8%

8.8%

8.8%

9.5%

2013

7.8%

7.3%

8.0%

7.2%

7.2%

7.2%

7.2%

7.9%

6.4%

8.8%

7.5%

2014

7.5%

7.4%

7.1%

7.5%

7.0%

6.3%

7.0%

7.3%

6.3%

7.3%

7.1%

Avg

10.1%

8.8%

8.9%

7.9%

7.4%

8.0%

8.0%

8.6%

7.5%

8.6%

8.4%

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