Why Do Insurance Premiums Always Seem To Rise Each Year?

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Why Do Insurance Premiums Always Seem To Rise Each Year?

Expats that secure their own health insurance quickly learn that their premiums will rise year-on-year. Health policies aren’t like motor policies where, given you’ve made no claims, you’ll find a discount on your premium for the next coverage period. This article from our sponsor, Pacific Prime Dubai, will help explain why health insurance premiums always seem to increase and what you can do when your renewal time comes up.

This article was written exclusively for Expat Network by Pacific Prime Dubai

How are insurance premiums calculated?

When it comes to individual insurance policies, the premiums are generally calculated on two things: the personal information of the person to be insured and the general risk analysis for an insurance provider’s total membership (sometimes categorized by region or by plan/product type). What this means is that what you’re asked to pay for healthcare coverage is influenced partly by you and the rest will depend on the market.

Personal factors influencing insurance costs can include:

Your age
Current health status
Any pre-existing conditions
Where you live

A premium increase might be due to you moving up an age bracket (potentially to an age which sees higher claims), a significant personal health issue that may cost a lot in future claims, or simply be because you live in a country where healthcare costs are high.

Market-related influences are less understood by consumers – but are arguably more important when it comes to setting premium rates.

What are the main non-personal drivers of premium inflation for expat insurance?

Expat insurance, or specifically international health insurance, is common for those people living and working away from their home-country. The international insurance market is strongly influenced by a number of global and local price drivers that impact what you pay initially and at renewal time. These main factors are:

The high price of medical technology: The more hospitals and providers pay for new technology and medicines, the higher the cost of healthcare. For insurers footing those bills, the increasing costs are often passed on to insurance consumers.
An imbalance of health resources: In areas where the supply of health services is outweighed by demand, providers (particularly private sector hospitals) are again able to charge a premium for care that’s faster and of a higher quality.
Increased compensation for medical staff: As hospitals seek to raise prices, so too do those whose salaries they pay. Doctors are already among the highest paid skilled professionals, and their salaries and allowances are also still increasing.
Overutilization of health services: With places around the world seeking to address the concerns of ageing populations, care providers are having to invest more in expanding their capacity to avoid overcrowding and long wait times.

In addition to these common influences on insurance pricing, meeting compliance and regulatory requirements (such as the mandatory health insurance laws of Dubai), changing economic conditions, and insurance-industry actions to combat fraud all play a part in determining how much your insurance premiums will rise by annually.

What can I do about premium increases at renewal time?

The first thing you can do to better prepare yourself for premium price discussions is to learn more about the average price inflation rates in your region. A recent report on International Private Medical Insurance Inflation by Pacific Prime can let you know whether or not your current policy’s premium increase is above or below the average for your region and plan type.

Secondly, engaging the services of an experienced insurance broker can help a lot. An intermediary, like Pacific Prime Dubai, can assess your current plan’s premium increase and let you know whether it’s in line with market expectations or not. If it’s good, they’ll handle the renewal process. If you can get a better deal, they’ll negotiate that on your behalf too. Contact the team at Pacific Prime Dubai today to get the best support for your expat insurance needs.

Moving Abroad Checklist

Initial Considerations

Will your partner be travelling with you?

If so, what will they be giving up in your present home and will they be able to continue with their career in your new home? You will need to check whether a separate visa is required for your partner to work or if your visa gives that right. If they are unable to work you will need to decide on the effect on your finances and what alternatives are available to give a fulfilling life (home business, training, voluntary work).

Are you taking family with you?

Moving with family raises many exciting opportunities, but also can create challenges. The HSBC Expat Explorer survey indicates that expat kids can take six months to settle in to their new country (see article). Getting young or even older children to prepare to move and leave their friends and family behind can be a challenge and should be thought through.

The options for education is another area that needs to be thought through.

Moving your child to a new country with a different education system can be a great opportunity to broaden their experience, but if they are close to key exams the timing can make this inadvisable. If you do take your family with you, it is important to decide between joining the local school system or choosing an international school.

Where will you be living?

Whether you will be living in a house or apartment, furnished or unfurnished, these decisions will affect what you need to take with you. The time you are planning to live overseas will also affect whether you should leave your property at home empty, rent it out or sell it. See the article Sell, Store or Ship.