After Blue Cross was brought under AIA, are first-year premiums for the Voluntary Health Insurance Scheme 50% lower?

AIA completed its acquisition of Blue Cross from HKBEA Bank at the end of August this year, making Blue Cross officially part of AIA. Although the two companies are now under the same roof, the first-year premiums for semi-private room plans with no deductible under the Voluntary Health Insurance Scheme differ by as much as 50%.

AIA’s management revealed in an interview that Blue Cross plans to target the younger market, while AIA will focus on mid-to-high-end customers, with the two brands developing in parallel for different markets. Consumers, however, remain more concerned about the differences between Blue Cross and AIA’s products. In the past, Blue Cross was precisely a smaller insurer, with a less powerful brand effect and sales distribution network than AIA. Its products therefore needed to offer lower premiums but higher coverage.

Now that it has become part of AIA, the discounts associated with scale and brand effect have clearly been significantly reduced. However, premiums continue to differ considerably, seemingly offering consumers a better choice. A comparison of the coverage and premiums of the two companies’ semi-private room Voluntary Health Insurance Scheme plans with no deductible demonstrates this.

Table: Comparison of AIA and Blue Cross semi-private room Voluntary Health Insurance Scheme plans with no deductible

(Assuming the insured is a 35-year-old non-smoking male)

According to the analysis by 10Life’s actuaries, both the Blue Cross Dynasty VHIS Plan (the “Blue Cross Dynasty”) and the AIA Voluntary Health Insurance Privilege Plus Scheme (the “AIA Privilege Plus”) achieve full marks for medical coverage. There are only minor differences in individual items, such as the lifetime benefit limit and the number of additional benefits. Overall, their high levels of coverage can therefore be considered comparable.

However, the premiums of the two products differ considerably. Assuming the insured is a 35-year-old non-smoking male who chooses a plan with no deductible, the first-year premium of the Blue Cross Dynasty (HKD 10,834) is nearly 30% lower than that of the AIA Privilege Plus (HKD 15,448). Comparing the average annual premiums over the next 10 years, the Blue Cross Dynasty is also 26.5% cheaper than the AIA Privilege Plus, representing a total premium difference of HKD 44,020.

Agents often say that they aim to introduce the best Voluntary Health Insurance Scheme plan to their clients. However, even though the Blue Cross Dynasty offers better value for money within the same group, AIA agents may only be able to sell the relatively less cost-effective AIA Privilege Plus due to licensing restrictions.

Buying Blue Cross Dynasty at present is like buying an AIA product at a discount, but this premium “discount” may not last forever. In fact, BEA Life previously offered a deferred annuity called “智優悠” with a relatively high guaranteed rate of return. Shortly after AIA acquired BEA Life, this deferred annuity was withdrawn from the market.

Furthermore, premiums for Voluntary Health Insurance are not fixed each year. When an insurance company needs to maintain its profitability, premiums may increase in the future even where guaranteed renewal is offered. However, if readers consider Blue Cross Dynasty to be a relatively cost-effective choice, they can seek assistance from a 10Life insurance adviser.

Notes: 
1. The above premium information was updated on 16 November 2022 and does not include the premium levy collected by the Insurance Authority. 
2. The last update date of this article: 16 November 2022.

This English version of this article has been generated by machine translation powered by AI. It is provided solely for reference purposes. In the event of any discrepancy or inconsistency between this translation and the original Chinese version, the Chinese version shall prevail.