How We Calculate Your Renewal Premium

What is a renewal premium?

A renewal premium is what you pay to continue your company’s 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/ Claims your employees made in the current policy year

We take into account claims your employees make. We assess all your employees as a whole, looking at the claims experience and benefit utilisation. We may increase your renewal premium if we’ve paid a high total value of claims to your employees in the current policy year. Conversely, we may reduce your renewal premium if we’ve paid a low total value of claims to your employees in the current policy year.

2/ The age of your employees

Health insurance premiums increase as your employees (and their dependants) get older.

3/ Changes you make to your policy

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

4/ Moving country

If one or more of your employees move to a different country, your renewal premium will change. If an employee moves to a country where private healthcare is cheaper, then your renewal premium will be lower. If an employee moves 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, your employees can take advantage of many of these breakthroughs with their health insurance cover.
• 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/ If your employees regularly receive medical treatment in a different country

If one or more of your employees regularly receives medical treatment in a country that is not the country of residence stated on their certificate of insurance, we may reclassify their country of residence and re-calculate your renewal premium on the basis of that reclassified country of residence.

7/ If new employees join your policy

If new employees joined your health insurance policy during your current policy year, your renewal premium will be higher.

8/ 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 tax authority of the country where your company is registered.

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/ Your employees’ state of health

The current state of health of your employees has no bearing on your renewal premium. We won’t, for example, increase your renewal premium if your one or more of your employee’s health has deteriorated or one or more of your employees is midway treatment for a serious medical condition.