Health Insurance is one of those things in life which rarely gets cheaper. When i send out renewal notices to clients I am often asked “Why is it more expensive”. I then explain to my clients that premium increases are down to several aspects, which I will explore here.
- Medical Inflation. As with any consumer item, health insurance premium increases cost with time. Doctors salaries increase and the costs of medicines and equipment rise. Hospitals increase prices which means the bills which insurers need to foot increases. Insurers then react to increased costs by increasing premium. The end result is that our health insurance costs more. Hospitals in Thailand are increasingly becoming monopolised which is leading to costs increasing markedly. With reduced competition in the market, the chances are that costs will continue to increase. Medical inflation cost increases vary across the board, but typically are between 5 and 10%. There is no saying when, or indeed if, an insurer will implement these increases, and if so, by how much.
- Your age. Getting older means that you are an increased risk to the insurer as you are statistically more likely to get sick. Most insurance companies have age bands from which they work out their pricing. For example, there may be a 19-25 age band and then a 26-30 age band. Moving up an age band will mean you pay a higher premium. As you get older, the health insurance premium increases between age bands become steeper.
- No claims discounts. Many insurers offer no claims discounts for years when you do not make claims. Building up a no claims discount is the only way you can make your premiums lower year on year. Whilst this is great, it can also lead to big renewal increases following a claim as at the next renewal you lose the discount. You could also face an increase due to medical inflation and an age band increase which would result in the ‘perfect storm’ of factors.
- Insurer price adjustments. Insurance companies employ actuaries whose job it is to analyse trends and look at how an insurance company is performing. Whilst adjustments do not take place on a regular basis, they can result in insurers charging some age groups more, or some age groups less, depending on how the pool of insured people is performing. Recently, many insurers have increased rates for children as the losses they were experiencing far outweighed the premiums being received.
The key thing to take into account is that your health insurance premium will not remain the same throughout your policy, as health insurance premium increases as it progresses. Speak to your broker about premium increases going forwards and make sure you factor them into your budgeting. While it’s impossible to foresee medical inflation increases, increases with age can be factored into to long term cost projections.