Hongkongers should study voluntary health insurance plans carefully because they could spend twice as much on a policy with nearly identical cover to cheaper ones, a city watchdog warned on Wednesday.
The Consumer Council issued the plea to shoppers after examining 57 plans from insurance companies and finding large price discrepancies.
The analysis looked at 29 “standard” plans, which are fixed with only minor variations in what is offered by rival companies, and 28 “flexi” plans that can provide tailored benefits and charges on top of the basic cover.
Among the standard plans, 10 provided identical protection, while the rest offered extras such as hospital cash payments and death-related benefits that compensated bereaved families.
While the coverage of all 29 schemes was similar, the council found the most expensive plans charged more than double the price set by the cheapest ones in all age groups.
For example, Liberty International Insurance would charge a 25-year-old man HK$3,006 (US$387) a year, nearly 80 per cent more than AXA, which set the cost at HK$1,689.
Liberty International’s annual fee of HK$36,166 for a plan to cover an 80-year-old woman was more than 150 per cent higher than AXA’s, which was HK$14,443.
Explaining price discrepancies in the industry, Gilly Wong Fung-han, the council’s CEO, said factors such as service quality, customer pool size and business maturity played a role in determining insurance premiums.
Hong Kong’s market is special as the consumers tend to be lazy. I have to say this
Gilly Wong, Consumer Council CEO
Wong said she hoped local consumers could learn to be smarter and spend time comparing different plans.
“Hong Kong’s market is special as the consumers tend to be lazy. I have to say this,” she said.
“They rarely do a lot of comparison [research] on their own, but mostly rely on their families and friends who work as insurance agents,” she said, adding many chose their agents based on referrals or adverts.
Wong conceded in a free market such as Hong Kong’s it was “almost impossible” to set a standard price on insurance plans with the same coverage.
Liberty International said it had no comment on its premium pricing, but added that it reviewed its rates each year, after competition review.
For the other survey of the 28 flexi plans – for which companies catered to the different needs of clients by offering enhanced benefits – the diverse range of extra coverage found by the watchdog made direct comparison more difficult.
It said differences in insurance products meant annual premiums for the flexi policies varied even more widely than those for standard plans.
For example, the annual charge for a 40-year-old man ranged from HK$2,901 to HK$47,682.
Among the 28 plans, six did not cap how much could be claimed in annual benefits or set a maximum over a client’s lifetime.
Only four had such limits in both categories, while the remaining 18 set a yearly ceiling, the council said.
It added the annual cap for claiming the benefits ranged from HK$420,000 to HK$30 million between providers, the larger sum being 71 times higher than the smallest.
The council also advised consumers to pay particular attention to differences found within the benefit ceiling for non-surgical cancer treatment, it said.
The report found only four of the 28 schemes provided full reimbursement. The remaining plans all had an upper threshold for benefits, which was generally between HK$80,000 and HK$700,000, but one offered up to HK$2 million.
Nora Tam Fung-yee, chairman of the council’s research and testing committee, said residents should take time to compare plans, adding that information was available to help them online.
“Everyone should spend some effort to carefully examine whether there is any difference between what the insurance agent told you and the contract’s terms, as well as comparing more products from different companies,” she said.
Wong reminded consumers that insurance agents might persuade customers to change to another plan as the Lunar New Year approaches.
But they would not need to switch to a new scheme if the current one already provided them with enough coverage, she added.
The Hong Kong Federation of Insurers said it believed insurance companies would naturally control their premiums and fees to ensure competitiveness.