More Transparency Needed on Premiums

A continuing lack of transparency around premiums can only be bad for business in the long run: The customer is now in control.

Benjamin Franklin famously said, “In this world, nothing can be sure to be certain except death and taxes.” If he was alive today, he might want to rewrite that quote to include increasing insurance premiums. Every year, without fail, premiums rise. That's great news if you’re an insurance company, but it's not so great when you’re renewing your annual policy. And while there’s a weary public acceptance that insurance premiums will inevitably go up because insurance companies do, after all, have to make money like any other business, transparency around premiums and how they are calculated is an issue. Insurers still fall short when it comes to explaining to their customers about rates. Jargon is rife in communications to customers and is often indecipherable, which just makes matters worse. Consider my own recent experience: I purchased travel insurance online and was sent a 22-page policy document to decipher — most of which would have benefited from a lawyer’s expertise to help me understand it. Nine pages of the document were spent explaining what wasn’t included in my policy!    See also: The Insurance Renaissance, Part 2 More insurance companies could ensure greater customer loyalty and instill trust by doing a better job at explaining some of the policies and clauses. For example, some international health insurance clauses that consumers may not be aware of but which are highly beneficial:
  • Many health insurers will provide protection for any unexpected cost in the future and keep providing cover even when a condition develops. They will keep paying the cost of any treatment required, up until the policy limits.
  • International health insurance will cover medical costs abroad, even if the insured chooses to travel for surgery outside her country of residence. So if there is a famous specialist in another country and someone wants to have surgery there, their insurance will pay the medical costs.
  • Most insurance companies will provide cover until very old age, 80 to 120-plus. This is important to know because if someone has an insurance policy that only provides cover up to the age of 60, it will be difficult to find insurance to cover any conditions subsequently developed. And this is the age when health insurance is more useful than ever.
  • There are now insurers that are rewarding customers who don’t make a claim with a "No Claims Discount."  
And one that could cause confusion:
  • A person may think he is covered for as much as $1 million under health insurance for hospital bills and treatment etc., but what is often unclear is what conditions are not covered by that sum.    
See also: Important Alliance to Fight Health Costs At the end of the day, buying insurance should be viewed as an investment that provides peace of mind and reduces a person’s financial liabilities — and everyone would agree that this is worth paying for. But consumers should be given the opportunity to make a much more informed choice when renewing a policy by having much greater visibility on how premiums are determined. For the insurance industry, a continuing lack of transparency around the calculations of premiums can only be bad for business in the long run. In a fiercely competitive industry like insurance, consumers now have more choice than ever when choosing a policy. So maintaining customer loyalty is everything and, together with consistently good customer service and swift settling of claims, the key to ensuring customer loyalty is better communication and transparency across the industry. After all, it’s much harder to win new business than to retain existing customers. A more consumer-focused insurance industry will also encourage more people to purchase their products, so getting better at communicating can only be a win-win situation. It’s also about making the process simpler, easier, transparent and giving an online experience that customers would expect. Most people can take bad or difficult news if it is explained to them properly — and getting a clear, jargon-free and understandable explanation for insurance premiums puts the purchasing decision power back where it should be: in the hands of the consumer.  

Andre Hesselink

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Andre Hesselink

Andre Hesselink is the CEO of, Asia’s first and only meta search engine for finance and insurance products. He launched the company in 2015 when, after moving to Singapore in 2011 to set up the Asian branch of Travix, his frustrations trying to purchase car insurance inspired him to launch GoBear.

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