How We Calculate Your Renewal Premium

What is a renewal premium?

A renewal premium is what you pay to continue your health insurance policy for another policy year. This post sets out how we calculate your renewal premium, and—just as important—the factors we don’t consider when we make those calculations.

We know you’re less likely to renew your policy with us if your renewal premium is too expensive, so we try to keep your premium increases to a minimum. And while it does seem like everything is getting more expensive these days, this is not a case of us trying to boost our profits. There are some very real challenges in private healthcare (which we touch on below) that all insurance providers must deal with.

We’re working behind the scenes to deal with these challenges, and to make new options to help you reduce your premium. We also absorb as much of the increased costs as we can.

Here are some reasons why your renewal premium is higher than last year’s premium.

What affects your renewal premium

1/ Your age

Health insurance premiums increase as you get older and the risk of you needing private healthcare increases.

2/ Where you live

We charge different premium in different countries. This is because the cost of private medical treatment differs from country to country. In certain years, we may increase premiums in certain countries and reduce premiums in other countries.

3/ Changes you make to your plan

Your renewal date is a good time to make changes to your plan. If you want to upgrade your cover (e.g. choose a more comprehensive plan, reduce your excess), then your renewal premium increase will be higher. If you want to downgrade your cover (e.g. choose a less comprehensive plan, increase your excess), then your renewal premium increase will be lower.

4/ Moving country

If you move to a different country, your renewal premium will change. If you move to a country where private healthcare is cheaper, then your renewal premium will be lower. If you move to a country where private healthcare is more expensive, then your renewal premium will be higher.

5/ Medical-related increases

There are some medical factors we consider when we calculate your renewal premium:

• Inflation – Most countries have suffered from higher general inflation, probably due to fiscal and monetary stimuli following the COVID-19 pandemic. General inflation has been exacerbated by higher energy prices following the war in Ukraine. Inflation in the healthcare sector typically tracks higher than general inflation. This means we’re seeing much higher costs when our members claim for private healthcare, which in turn puts pressure on insurance premiums. Inflation is different from country to country, so this factor doesn’t affect renewal premiums uniformly.
• Cost of new treatments – We’re witnessing a golden age of medicine, with astonishing breakthroughs in gene editing, immunotherapy, and the use of artificial intelligence in an increasingly broad range of treatments. While these breakthroughs improve clinical outcomes for patients, they drive up the costs of treatments. Higher costs mean more expensive claims for health insurance providers. Of course, you can take advantage of many of these breakthroughs with your health insurance policy.
• COVID-19 – There’s evidence that people’s inability to access healthcare and medicine during the pandemic stored up healthcare problems for the future. While routine check-ups weren’t possible and it wasn’t easy for people to seek diagnosis and treatment for symptoms, illnesses could get more serious without treatment. Late diagnosis and treatment are generally more expensive, leading to more complex and more expensive claims for health insurance providers.

6/ Changes to the no-claim incentive

This applies only to members who joined us when we offered the no-claim incentive.  Last year, we changed the way the no-claim incentive works to make sure we maintain sustainable and fair pricing for all our members. If your date of entry was before 01 January 1999, we’ve again used your age at your renewal date in 1999, plus four years, to calculate your renewal premium. If your date of entry was after 31 December 1998, (but before 01 January 2007), we’ve again used your age at your date of entry, plus four years, to calculate your renewal premium.

7/ Insurance premium tax

Many countries levy an insurance premium tax and other taxes such as VAT or stamp duty. These taxes are increasing in several countries. Though we collect these taxes, we don’t benefit from them. We direct them to the relevant tax authority for your country of residence.

6/ When you regularly receive medical treatment in a different country

If you regularly receive medical treatment in a country that is not the country of residence stated on your certificate of insurance, we may reclassify your country of residence and re-calculate your renewal premium on the basis of that reclassified country of residence.

What doesn’t affect your renewal premium

Knowing what doesn’t affect your renewal premium for health insurance can help put your mind to rest.

1/ Claims you made in the current policy year

Unlike some providers, we won’t increase your renewal premium if you’ve made a claim in your current policy year.

Members purchase an insurance policy in good faith, so we don’t think it’s fair to penalise them for legitimate claims.

2/ Your state of health

Your current state of health has no bearing on your renewal premium. We won’t, for example, increase your renewal premium if your health has deteriorated or you are midway treatment for a serious medical condition.