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Medical Insurance Rating Methodology Enhanced for More Comprehensive Product Comparisons
The medical insurance market is highly competitive, and features that were previously selling points of mid- to high-end medical insurance products are becoming increasingly common. As mentioned in our earlier article, there has also been a growing trend towards full-coverage products under flexible Voluntary Health Insurance Scheme plans.
In response to this change, 10Life has updated the rating factors used in its medical insurance rating methodology, in the hope that the industry can continue to improve, enhance product coverage and bring the rating methodology closer to consumers’ needs. The rating factors include:
- Medical coverage rating – the coverage rate provided by a product for specified illness and injury cases
- Protection against medical inflation – whether the product has features that protect against medical inflation
Raising the coverage threshold for breast cancer cases
Let us begin with the medical coverage rating. This rating involves the medical expenses of 12 illness and injury cases of varying severity (see the table below). Different illness and injury cases involve different medical services, such as diagnostic scans, surgeons’ fees and operating theatre fees, prescription medication, chemotherapy, medical devices and post-discharge rehabilitation care. The expenses vary in amount. Based on the maximum compensation provided by a medical product for each illness and injury case, 10Life actuaries calculate the product’s estimated average coverage rate (Note 1), enabling comparisons between various medical insurance products available in the market.
At the same time, we contacted the claims departments of several insurance companies to obtain preliminary estimates of the medical expenses for the specified illness and injury cases, and then reviewed these estimates with several specialist doctors in Hong Kong. We also used publicly available information to ensure that the estimates were reasonable, including reference charges for common surgeries listed on private hospital websites, reference charges for private medical services under the Hospital Authority, and claims data from the Hong Kong Federation of Insurers’ website (2015).
In this update, we have also increased the assumed medical expenses for breast cancer cases, while keeping the assumptions for the other cases unchanged. In the new breast cancer case, in addition to the cost of mastectomy, we have included the expenses of reconstructive surgery, chemotherapy and radiotherapy. We then reassessed the coverage rates of the relevant medical insurance products to identify those with better coverage. After all, breast cancer is the most common cancer among the top five cancers affecting women (Note 2) and should not be overlooked.
Table: 12 illness and injury cases of varying severity
| Illness and injury category | Illness and injury case and treatment |
| Cancer | Breast cancer: mastectomy, reconstruction, chemotherapy and radiotherapy Lung cancer: lobectomy Liver cancer: surgery and targeted therapy required Colon cancer: laparoscopic colectomy and chemotherapy required |
| Injury | Anterior cruciate ligament surgery Total knee replacement |
| Vascular disease | Angioplasty with stent insertion Stroke Day-case haemodialysis |
| Non-serious illness | Fever requiring hospitalisation Haemorrhoidectomy Colonoscopy (day treatment) |
The importance of protection against medical inflation
Compared with medical insurance that imposes limits on individual coverage items, full-coverage products may be easier to claim under, but they are still subject to the maximum compensation limit per policy year and the lifetime maximum compensation limit. Medical inflation in Hong Kong is severe, reaching 8.3% and 8.1% in 2019 and 2020 respectively (see Note 3). In addition, with Hong Kong’s ageing population, medical costs are highly likely to continue rising.
As policyholders generally renew their medical insurance every year, this type of insurance is, to some extent, long-term in nature. It is therefore possible that, after many years, medical inflation may unfortunately cause claims to reach the compensation limit, resulting in inadequate coverage. Therefore, in addition to considering the estimated coverage rate for specified illness and injury cases, 10Life also considers whether a product has the following three features to protect against medical inflation:
- Full coverage (most items under the product have no sub-limits)
- High maximum compensation limit per policy year
- General ward: greater than or equal to $5,000,000
- Semi-private room: greater than or equal to $8,000,000
- Private room: greater than or equal to $20,000,000
- No lifetime limit or a guarantee that coverage will not be reduced (applicable to all Voluntary Health Insurance Scheme plans)
Fewer than 10% of products can receive a 5-star rating
To make it easier for consumers to identify quality products with better coverage, 10Life has introduced a 5-star rating system. 5-star ratings are based solely on product features and objective data, and are not affected by commissions or referral fees from insurance companies. A product receives a 5-star rating when its medical coverage rating is 9.95 or above and it has features that protect against medical inflation. Among the many products available, fewer than 10% can receive a 5-star rating. To compare 5-star-rated products, you can use 10Life’s Insurance Decoder:
- Compare Voluntary Health Insurance Scheme plans (5-star-rated products)
- Compare mass-market medical insurance (5-star-rated products)
- Compare high-end medical insurance (5-star-rated products)
- Compare global medical insurance (5-star-rated products)
Finally, please note that the rating methodology involves assumptions and does not take into account other factors such as the underwriting process, the stringency of claims assessment or the policyholder’s individual needs. It is provided for general educational and reference purposes only and does not constitute sales advice.
Notes:
- 10Life calculates the estimated average coverage based on the medical expenses under ordinary circumstances for a range of common illness and injury cases involving different levels of severity and medical services, with 10Life actuaries comparing these expenses against the compensation limits of medical products. For details, please see “Rating Methodology for Mass-Market Medical Insurance”. The estimated coverage rates for the above illness and injury cases are calculated based on the estimated medical expenses for the relevant illness or injury under ordinary circumstances. They are intended to indicate the approximate medical expenses that medical insurance and consumers are “expected” to bear and are provided for reference only. They have not been confirmed by the relevant insurance companies. Users should not regard them as the actual medical expenses. The severity of each illness or injury case, the treatment required and the insurance company’s claims assessment may differ, all of which may affect the actual compensation received by the insured. The actual compensation is subject to the terms and conditions of the policy, and the insurance company has the final decision-making authority.
- Data sourced from “Hong Kong Cancer Statistics Overview 2019”. Hong Kong Hospital Authority; October 2021.
- Figures taken from Aon’s “2020 Global Medical Trend Rates”.
- The above information is provided by 10Life and was updated on 9 December 2021.
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.
10Life Editorial Team
Our team of professional content researchers focussing on insurance
10Life Editorial Team
Our team of professional content researchers focussing on insurance
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10Life Product Comparison and 10Life Insurance Ratings are developed by 10Life Financial Limited, an authorised insurance broker company licensed with the Insurance Authority under License Number FB1526. 10Life Product Comparison and 10Life Insurance Ratings are developed for generic customer segments using mathematical calculations based on product information, facts and data, and are not influenced by any partnerships with or fees received from insurance companies. Any information on 10Life Platform ("10Life Information"), including but not limited to Product Comparison, Product Ratings, Blog Articles are intended for general education purpose and reference only. None of the 10Life Information is intended, nor should they be considered or relied upon, as regulated advice, insurance, financial, investment or professional advice, recommendation, approval, endorsement, invitation or solicitation in respect of any insurance, financial or investment products. 10Life Information does not take into account your individual needs. Reading 10Life Information should not be considered as conducting a suitability assessment, and is not sufficient to form the basis of any decisions to purchase any insurance products. You should rely on information authorised by insurance companies, carry out your own research and/or seek independent advice from licensed intermediaries before purchasing any insurance products or making any insurance decisions. While reasonable effort is used when collecting, validating and updating 10Life Information from various channels, none of 10Life Group and its subsidiaries, affiliates, agents, directors, officers and employees will be responsible for any liability, claim or loss arising from or associated with you using 10Life Information. No warranty, representation or guarantee is given by 10Life Group and its subsidiaries on the accuracy, completeness and timeliness of the information. If you have any questions on 10Life Product Comparison and 10Life Insurance Ratings, please email us at enquiries@10life.com
