Year 2015 - The New Challenges of Insurance Regulatory Reform 保險業新規管 帶來的新機遇

I. Tax incentive The current proposal of about HK$450 per person per annum is not an incentive at all to induce people to join VHIS. We propose that the tax relief amount is equivalent to the premium paid per annum up to say HK$20,000. All hospital insurance plans (not just the compliant products) are eligible for such tax relief. This will induce more people to buy their own private hospital insurance instead of going to the Public Health System. J. Regulators Setting up another regulatory regime to regulate all individual medical insurances is only appropriate when the society has mandatory medical insurance. It is better to pass on such responsibility of regulation to the Insurance Authority (“IA”) or IIA in future. This will save the huge administrative cost and bureaucracy of having two separate agencies governing the insurance providers. Since the prudential regulation always remains with the IA, consumers will have concern when the Health Insurance Regulator is agreeing to launch any new health insurance product in the market without knowing that this particular insurer is already having financial problem. At the end of day, when this medical regulatory agency becomes another statutory body, middle class do not want to foot the bill of running this agency by tax payers’ money or by the industry, in which case the cost will only pass back to consumers. K. Claims Dispute Resolution Mechanism It is unnecessary to set up another Claims Dispute Resolution Mechanism (“CDRM”). The market has in place very good dispute resolution system under the Insurance Claims Complaints Bureau (“ICCB”). Any individual claim under the amount of HK$800,000 is adjudicated by the councilors of the ICCB and their decision is binding to all insurer members. Individuals do not need to incur extra legal fee to seek mediation nor arbitration as proposed by the Document. L. Lack of consumer choice in the VHIS environment Customers demand enough choices of their own insurance plans. Currently, policyholders take out different forms of private health insurance plans to suit their needs. The lack of choice is even more acute for the unhealthy individuals. Under the VHIS environment, they will have no option but to join the HRP and pay 3 times premium or remain in the Public Health System. Whereas currently they can choose to buy a policy without loading but excluding a particular illness for which they could seek treatment in the Public System. They can go to private hospital for majority of the illnesses and the cost is covered by insurance except for those conditions being excluded. The Government should explore whether it could address the issue of mandating the acceptance of pre-conditions to a certain extent, without sacrificing consumer choice. Conclusion Ø Ø The success of VHIS depends very much on the transparency of aggregate big data from both healthcare service providers (including individual doctors) on fees charged by doctors and hospitals and insurers on claims and premiums. Withholding the implementation of Diagnostic-relate Groups (DRG)/packaged pricing would go against the objective of empowering consumers to make an informed choice and keeping provision of healthcare more affordable. Ø Ø Medical insurers should continue to improving their existing products and provide best practices by standardizing and refining policy terms, applying less exclusion, expanding coverage to clinical ambulatory procedures and rehabilitation, enhancing transparency of premium rate and the claims process in line with consumer expectation. Ø Ø We want to see more free competition among medical insurers to continuously improving and expanding product offerings to meet the changing needs and affordability of consumers. Ø Ø The Government should make sure that there are sufficient private hospital beds to meet the surging market demand when the VHIS is implemented. Ø Ø Given the fundamental weaknesses of the VHIS, a full range of private health insurance products not meeting all the minimum requirements should be allowed to exist along side with VHIS. Ø Ø The Government is invited to revise VHIS as proposed above. Otherwise, majority of the middle class people will be forced to stay away from private insurance due to the issues of UNAFFORDABILITY, UNAVAILABILITY & UNACCESSIBILITY. In this situation, Public Health System will become our only preferred choice, thereby adding further burden on the Public Health System. The original intention of setting up this VHIS to divert some people to Private Healthcare Services and so releasing resources from Public Health System will be defeated by some major issues discussed in this Consultation Document. Mrs Agnes Koon Chairman of Insurance Training Board, Vocational Training Council Chief Executive of KSY Speciality Limited 25