Hong Kong's implementation of a voluntary health insurance scheme is credit positive for insurers, Moody's said.
The rating agency said March 5 that the new scheme will increase health insurance products' affordability and penetration, while allowing private insurers to maintain a high degree of underwriting flexibility.
The city's Food and Health Bureau on March 1 announced a voluntary health insurance scheme under which a Hong Kong resident's premiums paid for a certified individual indemnity hospital insurance plan will be tax deductible.
The scheme offers flexibility and autonomy for insurers to set their terms for participation. Insurers can still impose premium loading or case-based exclusions based on different risk factors when accepting applications, or even reject applications through providing written explanations. They can also opt to offer a flexible plan with enhanced coverage.
Moody's expects the scheme will still allow participating insurers to adhere to their internal underwriting principles when offering these certified indemnity hospital insurance plans to lessen pricing risks.
In addition, Hong Kong insurers also will benefit from the cross-selling opportunities because the increased awareness about medical insurance will mean a higher demand for other insurance products covering disability, critical illness or retirement planning.
