Press Release
LCQ 6: Medical insurance schemes
Wednesday, May 15, 2002
Following is a question by the Hon Emily Lau and a reply by the Acting Secretary for Financial Services, Miss K C Au, in the Legislative Council today (May 15):
Question:
The medical insurance schemes provided by some insurance companies do not cover all the medical expenses incurred by the insured for treatment of serious or chronic illness in private hospital. As a result, some insured persons need to rely on public medical services during the late stage of their illness, thus increasing the burden on public funds. In this connection, will the Executive Authorities inform this Council whether:
(a) they are aware of such a situation; and
(b) having regard to such a situation, they have considered reviewing the regulatory mechanism of the insurance industry and adopting effective measures to ensure better health care protection for the public and reduce the burden on public medical services?
Reply:
Madam President,
In Hong Kong, every citizen has a right to seek medical treatment for illness from the public sector. Nobody will be deprived of such right because he/she has taken out medical insurance. In choosing between public or private medical services, the quality of, and the level of fees payable for, such services are the main consideration.
In response to public preference and market demand, insurers offer different types of medical insurance products. Such insurance products are designed to meet the specific needs of policyholders, and provide protection to them according to the terms of the relevant policy. A maximum level of protection is usually included in the insurance policy.
The purpose of medical insurance is to enable policyholders to spread the risks of losses and expenses caused by illness. Medical insurance is not a substitute for public medical services.
The scope of coverage and indemnity limit offered by medical insurance are matters of commercial decisions by the insurers. These decisions are made having regard to market demand. In general, the scope of coverage is related directly to the insurance premium. In considering the scope of coverage and indemnity limit, insurers will also take into account factors such as their underwriting policy and financial capability.
Our insurance market is free and open. In designing medical insurance products, insurers respond to the needs of individual policyholders and the premium he or she is prepared to pay. Where there is a demand and when it is commercially viable to do so, insurers would be willing to consider offering medical insurance policies to meet the needs of policyholders suffering from serious or chronic illness for treatment in private hospitals, or to offer a higher indemnity limit. In fact, there are medical insurance products in the market that cover longer-term hospitalization needs and policyholders are free to choose to receive treatment in either public or private hospital.
Under the current regulatory regime and pursuant to the provisions in the Insurance Companies Ordinance ("the Ordinance"), the Insurance Authority's responsibility is to monitor the financial condition of insurers and the fit and properness of their management. This is to ensure that insurers operate prudently and are able to meet their obligations towards policyholders.
Section 26(3A) of the Ordinance specifically prohibits the Insurance Authority from intervening into the level of premium or terms of an insurance policy. This ensures that the market operates freely, is conducive to market innovation and enables insurers to respond effectively to user demand. Similar provisions are also present in the relevant legislation in other jurisdictions such as the United Kingdom, Australia and Singapore.
We consider that the existing medical insurance market is functioning effectively. The Insurance Authority will continue to monitor closely the development of the market and ensure that the interests of policyholders are protected.
Similar to other business sectors, the insurance industry operates on commercial principles. Its operation and the choice of policyholders only reflect the current demand for and supply of medical services.