HR Guide to Corporate Medical Insurance

The HR Guide to Corporate Medical Insurance

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With 40 years’ experience in the medical insurance industry, Blue Cross recognizes the various needs of employers and employees.

We can tailor our products to meet those needs by providing affordable healthcare benefits with flexibility to suit your business and that your employees will value. We offer: Health coverage solutions designed for companies ranging from 3 to thousands of employees, including comprehensive plans for senior executives and expatriates Prompt settlement of outpatient and inpatient claims within 7 and 10 working days No pre-payment for admission to and discharge from a local private hospital Extensive network with over 1,000 medical centres and clinics in Hong Kong Access to a network of over 200 hospitals and medical units in China without prior deposit Free professional advice on pre-hospitalisation fee assessment and arrangement by medical experts Optional voluntary “top-up” scheme for employees and their families at privilege rate

For more information, speak to one of our account managers, who will work with you for a tailor-made package that fits the needs of your company.

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Employee Benefits Hotline: 3608 2850/3608 2851

Website: www.bluecross.com.hk

Foreword |

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Employee benefits, if appropriately and effectively adopted, will be a powerful tool in motivating and engaging staff. Corporate medical insurance is one of the common measures introduced within organisations in Hong Kong. With an ageing population and escalating medical expenses, healthcare provision is expected to be a key matrix for employee benefits. The HR Guide to Corporate Medical Insurance jointly published by HR Magazine and Hewitt Associates is a practical guidebook for all HR practitioners. It provides a comprehensive overview on the current practices in the market and valuable insights on the future trend.

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Publisher & Editor-in-Chief

Paul Arkwright

Louis Pong CEO Employers’ Federation of Hong Kong

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The HR Guide to Corporate Medical Insurance

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Preamble | It is now widely accepted that HR professionals are being asked to master an ever growing number of skill sets and to possess a hyper specialised form of knowledge in a marketplace that is constantly shifting and changing. As a result, when it comes to choosing the best option for a company’s group medical insurance plan, HR directors and managers are finding it difficult to navigate the myriad of choices and challenges that such an environment creates.

With recent advances in medical technologies and an ageing population, the cost of medicine has been steadily rising, and employees’ medical visits are now more than ever coming under the umbrella of their company’s medical plan.

Moreover, company benefits, especially healthcare programmes are becoming an increasingly significant factor driving employee engagement. So it should come as no surprise to anyone that when it comes to attracting, retaining and motivating talented employees, selecting the right medical insurance package is absolutely crucial.

However, the frustration that can occur among employees after their employers choose the wrong company policy is all too familiar in many organisations.

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HR is usually the first area where such frustration is vented. Thus for companies, choosing the right plan is not to be undertaken without the proper research and consideration and should not simply be based on the cheapest option.

In light of these challenges, we have created the HR Magazine— Hewitt Associates: HR Guide to Corporate Medical Insurance, which provides important, practical, yet easy-to-use information that will help HR professionals choose the best medical policies to match their organisations.

As healthcare debates occur around the world HR Magazine and Hewitt Associates look at Group Medical Insurance in Hong Kong in a global perspective. In the following article, Susan DeGregorio notes, “The future of cost effective healthcare provision around the world is in doubt.”

Hong Kong is not immune to this debate, In the last week the Hong Kong government has proposed a public option. Employee health has a proven effect on morale, productivity, absence and business competitiveness. Hence the risk of ignoring it are increasingly being seen as a business risk.

From a Hong Kong perspective we give highlights from the most recent HR Magazine—Hewitt Associates survey on medical insurance plans.

We found that according to the HR managers surveyed, private healthcare has gained increasing significance to achieving a company’s business goals. Also notable is that increasingly HR directors are choosing policies based on the coverage of claims as well as the size of the provider network as opposed to cost alone. The full survey is included in this publication in this complete guide and also on HR Magazine online.

We also cover the perspective of insurance providers. We interview two such providers and learn more details of the market and issues they are facing.

Many providers established in the US market are increasingly pooling resources in Asia as uncertainty continues in American healthcare reform. One trend in Hong Kong has been an increase in the size of medical provider panels and the collaboration of these networks with insurance providers.

Also important for HR is that there are many steps that can be taken to make coverage more efficient and cost effective.

Finally, we give a brief overview of the key group health insurance providers in Hong Kong to give HR practitioners an idea on what’s available and provide a guide to the most suitable medical insurance plan for your organisation.

Table of contents | Prevention better than cure: building a healthy workforce with corporate wellness

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Corporate wellness—building a resilient workforce Pandemic preparedness—too easily overlooked

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Market overview and analysis

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Industry perspectives

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Advice for HR professionals

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Insurance provider overview

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Fighting fit—Hong Kong Government weighs in Private health initiatives in Hong Kong

Global business risks relating to employee health HR Magazine/Hewitt Associates Medical Insurance Survey—key findings Rise of staff medical insurance costs in Hong Kong—2010 Health insurance benchmark summary

Healthy staff... healthy business Group health insurance—key trends

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Best practises: great governance of medical plans Sharing medical costs with employees through flex plans Global mobility strategies—health and wellness benefits a must Fit minds matter—understanding mental illness in the workplace

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Aetna American International Assurance Company (Bermuda) Limited

Asia Insurance Company Limited AXA China Region Insurance Company Limited Bupa (Asia) Limited Blue Cross (Asia-Pacific) Insurance Limited CIGNA International Expatriate Benefits HSBC Insurance (Asia-Pacific) Holdings Limited Manulife (International) Limited MassMutual Asia Ltd The Prudential Assurance Company Limited

The HR Guide to Corporate Medical Insurance

15 19 22 26 30

60 61 62 63 64 65 66 67 68 69 70

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Prevention and Building a Healthy Workforce with Corporate Wellness

Prevention better than cure: building a healthy workforce with corporate wellness Introduction | Populations are ageing and increasingly living longer with chronic conditions. This trend undoubtedly has an effect in the workplace and increases the cost to companies as employee absence levels increase. The World Health Organisation (WHO) has proven that many of the costly and disabling diseases can be prevented yet individuals, organisations and healthcare systems do not make the best use of their available resources to support this process. HR departments are ideally placed to inform employees about workplace

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health promotion and disease prevention strategies to improve their employees overall productivity and lower the cost of having an unhealthy workforce.

In this first section we feature two articles that deal with wellness promotion in the workplace and pandemic preparedness. In the first article Audrey Tsui argues that HR departments should not limit their wellness plans by only focusing on smoking cessation and alcohol abuse.

Tsui argues that wellness involves emotional, physical and intellectual components in what she terms ‘total

wellness’. The risks of ignoring total wellness are all too common according to Tsui. She cites the Japanese phenomenon of Karoshi or sudden death from exhaustion as an example.

Wellness shouldn’t be seen as a cost but an investment.

In the second article the importance of pandemic preparedness by the business community is emphasised. According to Dr. Robert Allen, Regional Medical Director of International SOS pandemic preparedness plans are an essential element of contingency plans for organisations.

Prevention and Building a Healthy Workforce with Corporate Wellness

Corporate wellness: building a resilient workforce | Audrey Tsui is a woman dedicated to spreading the notion of corporate wellness around Asia and into the wider international business community. She heads up the Corporate Wellness Management Unit in the business school at the Hong Kong Baptist University and uses seminars, publications and direct advisory contact with businesses to spread her point. Here she talks to HR Magazine about this topic, and in particular the idea of building resilience into your workforce to bounce back from the crisis.

Corporate wellness According to Tsui, the majority of the foreign companies in Hong Kong will follow the policies of their parent company for corporate wellness. The western idea of corporate wellness is based on tangible problems such as smoking cessation policies and employee assistance programmes for alcohol or emotional problems, but this is wrong says Tsui. “Why only pay attention to those employees with a problem now?�

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Prevention and Building a Healthy Workforce with Corporate Wellness

“Turbulent times are when we should pay much more attention to emotional wellness, spiritual wellness, intellectual wellness, as well as occupational wellness.” Commenting on the current trend for restructuring, firing and freezes in hiring, Tsui said, “For a lot of staff on the one hand they have a higher workload, but on the other they have higher anxiety. What will happen to me in the future. What will happen to this company?” She added that this is well indicated by increased calls to support hotlines, increased suicide and crime, the conclusion being that we should be dealing with these emotions better.

People have a misunderstanding, said Tsui; wellness is equated to fitness or massage or meditation in the minds of many. “That is a very narrow perspective.” Wellness counts both for individual employees as well as for the overall company, she said. It also comprises aspects of physical, intellectual, emotional and even spiritual features. Tsui dubs this ‘total wellness’. Component features might be broken down further still, for example emotional aspects are confidence, positive feelings and emotional resilience, while intellectual aspects include thinking and love of learning. Tsui defines spiritual wellness not as a religious thing, but instead a kind of moral awareness, a basic principle to distinguish good and bad. “There is a strong sense of injustice in the world currently,” she remarked.

Karoshi Tsui claims to have seen many people of a young age in businesses and among students, aged mid20’s to mid-40’s, dying without getting sick. She said that this has changed her whole opinion of stress. Part of the increased number is the higher levels of young people committing suicide, and part of it is sudden death syndrome, what the Japanese call karoshi, or death from exhaustion. Research shows that sudden death can be related to fatigue, perhaps caused by an extended period of long working hours, and stress, or because of a hostile living environment. She noted that both fatigue and stress are amplified in Hong Kong with the culture of long working hours, persistent building works,

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the noise and stressful conditions on the street.

Tsui added that fatigue is not just physical but is mental too. Secondly she explains that under her definition of stress, stress is actually a feeling of fear, uncertainty and a lack of control. In the working world staff are not given the power to control what they are doing, she said. Staff develop cynicism because they see the top decision maker asking them to do things they do not believe in, or that are not ethical. Things are not transparent and there is a lot of inequity, she added.

Occupational wellness and fortitude Occupational wellness is how comfortable people feel when contributing, how committed they are and if they want to dedicate themselves to do more.

Tsui offers an equation for the business perspective along the lines of ‘engagement + resilience = organisational fortitude.’ Here resilience is defined as the ability to bounce back from adversity. “In the last few years there’s been a lot of discussion about how companies can survive. A lot of talk focuses on fortitude, which refers to mental strength—to suffer pain and to face danger with courage.”

The purpose of engagement is not only to get employees to do things, but also to have them involved in generating ideas, about plans and strategies, company direction, effective implementation, and how to do things in a moral way. Tsui said that research shows that people do not want to work for money, they want to have meaning in their work. Financial return is necessary, but it is not sufficient to get people totally committed, meaning companies need to look deeper at an employee’s needs, said Tsui.

Tsui said, in many organisations “the boss’ attitude is ‘I think you do’, but this only engages the body of the employee, this doesn’t engage the employee’s brain or heart, so doesn’t make them feel they have worth.” She added that in many ways multinationals treat their entire staff in Hong Kong and other local subsidiaries as just ‘doers’ and don’t actually involve them in determining company direction.

In Hong Kong and other Asian cities wellness is often part of HRM, so it is usually the same

Prevention and Building a Healthy Workforce with Corporate Wellness

person in charge that’s also in charge of benefits.

“They make you feel very frustrated,” Tsui said.

“Why do you treat wellness as a cost, wellness is an investment, and it can generate strategic return.” But, she continues, “nobody talks about it, they talk about reducing medical costs, instead realising that reducing these things stops the company from advancing.” Tsui said that an engaged workforce has been shown in numerous surveys to generate substantially more returns, as employees are willing to take extra steps to achieve a business end.

Tsui said her point is particularly relevant in service sectors. If an employee believes in the firm they will interact with customers with intimacy. “How can banks regain the trust of customers who made losses? They have to continue to pay attention to them, reduce the pain they’re suffering and monitor, and show care and concern, which is itself a service.”

Tsui underlined one example, referencing the recent Sanlu milk powder scare in mainland China.

The former chairperson, Tian Wenhua, made a big

mistake in that she never apologised, Tsui said, whereas the replacement did immediately when they took over. The next step for the replacement Chair was sending staff to different provinces to see what the company can do, which Tsui described as an ‘excellent gesture’. Tsui added, “Because they cannot produce, a less imaginative company would retrench their staff. Instead of doing that he mobilised his workforce—sending them out to the rural areas where the powder caused problems, saying: whatever we can do, we will do.” This is the kind of additional gesture Tsui feels companies need to work towards.

Creating a resilient workforce To create a resilient workforce Tsui said a company needs three things: • A culture of paying attention to wellness in the organisation • Honouring business ethics and business integrity • A management support system that ensures things like that happen.

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Prevention and Building a Healthy Workforce with Corporate Wellness

Tsui said she believes in self-help. She says that in Hong Kong and Singapore when companies have a problem, they tend to seek outside help.

For example, if people are depressed­—hiring a clinical psychologist—but without really asking the question why or tracing the route of the problem.

She believes managers avoid the issue with outside hires so that if anything goes wrong the accusation will not fall on them.

Who handles wellness?

Tsui believes that the response of many medical staff to the notion of corporate wellness is, “Who are you? Coming here from management, to talk about wellness—you are not medically trained. We make sure you are not sick, and because you’re not sick you won’t die.” But she believes that this attitude is wrong.

She added, “Wellness management should be a multidiscipline one. It should not belong to medicine, or public health, psychology, social work, nor HRM. It’s an issue that needs the input of all.”

Though she acknowledged managers would sit at the top of this system as decision makers, she still underlined that it is a case where everybody should have a say. “It’s about involving and engaging the employees to team up with the leader, so that they come up with a solution as a team. In order to do that managers must be open, and generate a trusting relationship,” Tsui said.

Tsui’s research indicates that the major problem with the management support system in greater China was the lack of communication. Management support does not simply mean, “You tell and employees listen,” but it should also involve employees coming up with ideas that might make a difference.

Asian wellness in decline Overall, Asian wellness is decreasing at the cost of increasing wealth. Tsui cited one reason for this as the increased disparity between rich and poor. “Wealth management is not only about the volume and pace of wealth accumulation, but it is also about the fairness and impact of wealth distribution,” adds Tsui,

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who also acknowledges socialist leanings. She believes the most critical agenda of these times is going back to examine emotional wellness, physical wellness and spiritual wellness. “We must stand up and say no and do something right now… we just have to face it straight on.” Tsui says that a number of companies are doing good work, but these are the minority.

Employees with good wellness are willing to do more in the community, which is good branding for the company. Tsui said that though community work is good, it is not as simple as just introducing a few of these types of projects. “It must be part of a company’s culture,” she said.

Fair exchange of value According to Tsui, the companies who are currently ‘doing it properly’ in terms of sales are going ‘back to basics’, that is a fair exchange of value between the company and the customer. “That is, the customer pays them for what they believe should be of value, for example drugs from a drug company—it is the function and usefulness to the end user of the product or service so it is up to the individuals in any organisation to work out how to create this value and create this positive service.”

She cited the pre-downturn practice of banks selling customers investment products in what she described as a ‘dishonest manner’, because customers were not being briefed properly about the risks. “When employees seek to maximise returns for the company, those returns are short term. The reason is that the bonuses were given to so-called talent, but in the end it exposed the company to so much loss.”

To underscore the difference in approach she discussed the difference between improving returns to shareholders compared to improving return to stakeholders; the latter includes customers the former does not. Spiritual wellness falls into this discussion because it is fostered by going back to basics, honouring good value to customers, good business principles, as well as getting employees involved in the process.

Prevention and Building a Healthy Workforce with Corporate Wellness

Pandemic preparedness: too easily overlooked |

With the recent outbreak of swine influenza, and the surrounding media attention, companies went onto high alert about a possible pandemic and the impact this might have on business.

Following the initial flurry of concern, however, interest waned as the media coverage died down and public perception became that H1N1 had failed to be as deadly as was first supposed, with complaints even levelled at The World Health Organisation (WHO) for scaremongering. But, warn health professionals, there can be a lack of preparedness due to this assumed level of safety, while in reality the threat remains high.

Diseases and media coverage Dr Robert Allen, Regional Medical Director for International SOS, a medical advisory firm, noted that there are a lot of myths surrounding both H1N1 and H5N1, human swine flu and bird flu, respectively, saying “These myths are really perpetrated by the fact that the majority of us get our information strictly from the media. If it’s not necessarily news-making, or if it’s old news, or not

particularly sensational it can be overlooked.”

He went on to say the one myth is that H5N1 and H1N1 activity only occurs during flu season, but went on to point out that according to World Health Organisation data there are H5N1 human cases in almost every month of every year; most of them in Asia, and most of them the general public is unaware of.

Speaking of the current swine flu outbreak, Allen said “What we were expecting to happen with H5N1 has already happened.” He noted that the illness has turned out to be less severe than first supposed, but added that “We have just been lucky so far…we’re very early in what will essentially become a worldwide pandemic.”

He noted that the danger is that if the disease hits the southern hemisphere where it is currently flu season it could pick up speed and change genetic make-up.

The danger then is that when it returns to the northern hemisphere in the next flu season it could potentially be more severe, which would parallel the early stages of the 1918 Spanish flu pandemic. “It’s not time to panic, but it’s way too early to let your guard down.” He added that the virus could be expected to spread, not just one season, but over several.

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Prevention and Building a Healthy Workforce with Corporate Wellness

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Prevention and Building a Healthy Workforce with Corporate Wellness

The difficulty with both H5N1 and H1N1 is that they are new—globally, nobody has built-up immunity to them yet. Talking specifically about H5N1, or avian flu, Allen said, “The [recent] activity in China is particularly noteworthy because they had more cases in January than in 2008. They went a significant time with no human cases and no outbreaks in domestic poultry. So the activity at the tailing end of 2008 and certainly the human cases at the beginning of 2009 has been a change from what seemed to be the status quo in China [during 2008].

If you look at the world stage, and look at countries such as Indonesia, Vietnam, Egypt and elsewhere, you’re seeing human cases every month, in every part of the high-risk world.”

Allen noted that on a per capita basis, the incidence rate in Indonesia is actually much higher than in China, contrary to the public’s perception of the problem being China-centric. “If there’s any message that’s important for human resource, business continuity, development and planning personnel…it’s that if you’re using the media for your primary information source, you’re probably not getting the most accurate picture of risk, and you probably can’t generate the best business continuity plan based on that information.”

For H5N1 the mortality rate continues to be around 65%. It has already become human to human transmissible, but what it hasn’t done is become efficiently transmissible. “The reason we worry about the flu season, is because the risk of it becoming highly transmissible is higher if someone is already infected with a common flu virus and they contract H5N1; those two viruses can exchange information.”

In this case, H5N1 could gain common flu’s high rate of transmissibility, while maintaining H5N1 fatality rate. A similar situation is possible with combinations of swine and avian flu. It is, however, equally possible that the virus can become less potent; what would happen is unpredictable.

Separately, Allen noted that though not reacting with a plan was a major problem, sometimes the bigger concern to the business in places like Hong Kong or Japan could be overreacting—that when the media is running a strong story it creates a reactive

environment and business act unnecessarily, wasting company resources. “The media is a bellwether—but it is an unreliable and unpredictable indicator,” he said.

Planning preparedness “If you believe what the world health authority is saying and the IMF is saying that a flu pandemic is the biggest threat to business continuity worldwide over the next five years, and if you operate in an area where the risk is a little bit higher [protection planning] becomes an imperative,” said Allen.

He noted that the discipline you have to go through to establish such a plan is similar to any kind of organisational contingency planning, and a useful process for the organisation to go through in and for itself.

The question of whether to do this in-house or use a consultant is a big one for an organisation, especially one concerned about money. Allen said an external consultant is usually more costeffective, because the business can leverage consultancy service experience. “The make versus buy equation becomes really important around this issue, but it’s really hard for an organisation to have a significant expertise in this area.

“Some industries such as the service industry or transportation because of government regulation have much more expertise…but your average institution really doesn’t have this. The second thing is when you do it internally you’re reinventing the wheel—you’re doing it from scratch and you’re doing it without knowing what other institutions are doing.”

“It’s not just about H5N1 or the topic de jour, but it’s about business continuity and understanding that the risk is continuous, that there are not going to be vaccines against a new virus, that the government is not necessarily going to come to your rescue.”

Allen said firms should remember “the priority for Tamiflu stockpiles being built up by governments is to protect the military, critical infrastructure and key medical personnel, not your business. What people often have said when we give seminars is ‘doesn’t the government have a plan?’ and don’t recognise that in their own statements the government is telling companies that it is their

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Prevention and Building a Healthy Workforce with Corporate Wellness

responsibility to provide for their people in the event of an emergency.”

The percentage of firms that already use disease planning is difficult to establish, according to Allen.

He described the take up among the global Fortune 100 multinational companies as “very high,” while he described the take up by established Asia-based SMEs as less but currently “not bad.” He added that the take up is poorer among companies that “don’t know what they don’t know.”

How might a plan work?

Allen declined to give a general example of a preparedness plan, saying that it must be company specific, with the only commonality being that firms should have one. “Pandemic plans really derive from your business model, different for different kinds of industry. What you do really depends how your business would be impacted by H5N1, in other words do you need to continue to operate, can you stop operating, do you have people in harm’s way and can you move them out of harm’s way?”

In addition, features of a plan include triggers for activation, management teams to handle the crisis, and responses depending on whether an outbreak is limited, local or global.

Giving a specific example of how a pandemic plan might work Allen described how a multinational automotive company might handle it: a firm with multiple factories in countries where H5N1 is

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common; where there’s an H5N1 outbreak near a factory which affects staff; where there are several hundred employees in the environment,

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It’s not just about H5N1 or the topic de jour, but it’s about business continuity and understanding that the risk is continuous.

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some expatriate, some local. “For the automotive industry, perhaps the smartest and best way to do it is to identify key personnel beforehand; have a plan to protect, manage and stay in contact with these personnel. Also, have a plan beforehand to educate your workforce how best to avoid becoming infected. The company would then close down operations and wait for the outbreak to pass. This is completely different from a financial company in the same city—people need to go to the ATM every day, people need to bank every day, so they must maintain operations in spite of that.”

Examples of ways to reduce exposure include personal protective equipment, anti-viral medicines to strategies for avoiding transmission of the disease. “There are a lot of things you can do, and a lot of it depends on how much risk you’re willing to take on as a company, how you operate on a day to day basis, and how those operations could be impacted,” said Allen.

“Simple things can make a huge difference…What we learned from the 1911 Spanish Flu epidemic is that cities that took even small measures saw a huge improvement in decreased mortality and decreased spread of the disease.

So even good handwashing techniques, avoiding congregating in large groups and keeping personal distance space, and having masks appropriate to the disease—in the case of swine and avian flu, N95 masks—can have a huge impact,” said Allen.

Prevention and Building a Healthy Workforce with Corporate Wellness

Pandemic preparedness and HR “I think so many times when you talk to HR managers you have some common features—first, a lack of awareness of the risks, but secondly a sense that it’s a monumental undertaking getting a plan—but it really isn’t. The third thing, particularly with Asian companies, is that they feel it’s a cost that they may be able to get by without actually doing,” said Allen. “People are not aware that somewhere between 22-60% of business travellers have some kind of medical event connected or medical problem related to the trip on an annual basis, depending who you quote,” said Allen. “The number one health risk is for business travellers, and for companies that do business in high-risk environments this number [of cases] can be quite high.

There’s also a risk of the traveller picking up a contagious disease and bringing it back and infecting the rest of the workplace.” It was noted that in some cases business travellers are actually less likely than tourists to take precautions, because for a tourist they prepare for a new experience, while high-frequency business travellers over time forget the risks.

Other diseases According to Allen the most common human diseases have vaccinations for them, so he

encourages companies to have vaccination programmes for the common diseases.

He explained: “it’s devastating for an oil rig to have an outbreak of measles or chicken pox because they haven’t vaccinated their employees.

Corporations can have huge absentee rates from normal human influenza so vaccination programmes for human influenza are important and save companies a great deal of money…all of these diseases are part of a higher occupational health plan for any organisation.”

Further information There are several ways to pick up information not filtered by the media. The WHO, and the Centres for Disease Control and Prevention both in the US and Europe all run constant public update website programmes that keep people up to date with the current situation. He added that most health authorities for the world’s developed cities will have website information about flu viruses for their own populations. ‘Sophisticated countries’ will also have country-run websites to update firms. Furthermore, medical advisory companies such as International SOS offer their own updates, such as a country by country grading.

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Market Overview and Analysis

Market overview and analysis Introduction | Group healthcare premiums are increasing. The Hong Kong government in a move which somewhat mirrors what has happened with the US Health insurance industry is seeking to enter and lower the costs for its citizens. This section analyses what Hong Kong HR professionals, global research, as well as industry consultants are saying about the debate and initiatives in the health insurance market.

The first two articles look at the proposal by the Hong

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Kong government to introduce a voluntary medical insurance scheme to the local market. Carl Redondo of Hewitt Associates analyses the reasons for this proposal as well as the potential ramifications of the HKD$50 billion input, proposed by the government, in incentives and subsidies. From the local debate we then shift to a global overview

by Susan DeGregorio of Hewitt Associates who argues that companies must implement country specific healthcare initiatives which

should then tie into firms’ global health strategies to manage costs.

In the third article, we look at the HR Magazine/Hewitt Associates Medical Insurance Survey in Hong Kong. Highlights of the survey indicate that 75% of the HR professionals who responded are planning on reviewing their group insurance provider in the current year.

Finally, we look at a study by Alliance Insurance Services which finds that insurance premiums in Hong Kong have increased 90% in the past five years.

Market Overview and Analysis

Fighting fit: HK Government weighs in |

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Market Overview and Analysis

After criticising some private insurance schemes for insufficient coverage, the government is fighting back with a proposal to introduce its own voluntary medical insurance scheme.

The government is hoping that over half a million individuals in Hong Kong will take up voluntary insurance coverage—allowing access to a more comprehensive range of healthcare options for patients who can afford private insurance.

The global debate on healthcare reform continues and the Hong Kong Government has recently entered the arena with the proposal to introduce a voluntary medical insurance scheme.

The government has expressed concern over excessive profits that are made via certain medical insurance schemes which offer policyholders insufficient coverage to allow private sector care and leave them with no option but to stay at public hospitals—which are far cheaper for insurers to cover. The government is hoping that over half a million individuals in Hong Kong will take up voluntary insurance coverage—allowing access to a more comprehensive range of healthcare options for patients who can afford private insurance.

Local insurance market overview Hong Kong is one of the healthiest places in the world: early health education, professional health services, and a well-developed healthcare system have all combined to afford Hongkongers the second highest life expectancies, and the fourth lowest infant mortality rate in the world.

With the population of Hong Kong standing at a shade over seven million, just under half of residents currently have some form of medical insurance.

Around one million have individual health insurance

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policies with just over two million being covered by corporate health insurance schemes. The remainder of the population, access the government-funded public healthcare system.

Recently, the insurance sector has come under criticism for lack of competition between different providers in the market. The government has indicated that insurance companies providing health insurance schemes must provide reasonable levels of coverage.

If the private sector does not live up to government expectations, then the government may set up its own insurance company to compete with the private insurers in the marketplace. The government proposes to set up its own voluntary medical insurance scheme to help set a benchmark within the industry and introduce competition to help keep coverage provided by existing players at reasonable levels.

There are no plans at this stage to turn this government scheme into an across-the-board public insurance scheme. Rather, the idea of the government scheme is to help ensure meaningful competition in the market and help avoid pricefixing among insurers. The scheme forms part of the government healthcare reforms and will be opened for public consultation later this year.

Market Overview and Analysis

Scheme objectives The proposed voluntary medical insurance scheme would be set up to try and move people away from the public system towards competitively-priced private medical schemes. If implemented, the scheme should bring two main benefits. Firstly, it will help level the playing field within the health insurance market by creating a set of industry standards for private medical services and medical insurance. Secondly, it will help reduce the huge financial burden that exists on the SAR’s over-burdened public healthcare system in the midst of an ageing population.

Scheme overview The government plans to inject around HK$50 billion in start-up funds into the proposed scheme—which it stipulates is to be used to help include as many people as possible. In doing so, the government then aims to spread the insurance risks throughout the population of Hong Kong.

If passed by the legislature, the scheme would only affect health insurance policies administered in Hong Kong. International health insurance plans that are administered outside the SAR would remain unaffected by any reforms.

The Hong Kong Federation of Insurers, representing local insurers, has agreed, in principle, to applying

a ‘basic level’ of cover to the scheme. This coverage would mean all insurance premiums would become age-specific, as opposed to experience-rated; and existing exclusions on the coverage of mental illnesses and congenital defects would be removed.

The proposed ‘basic’ insurance would only cover policyholders for in-patient healthcare in Hong Kong.

For optional additional fees, policyholders would also be able to extend policy coverage to include additional benefits such as emergency medical evacuation and global portability, if required.

Spanner in the works The issue of covering ‘pre-existing conditions’ has thrown something of a spanner in the works.

Many in the insurance sector are less than comfortable with the proposed age-rated government insurance scheme that would offer coverage of pre-existing conditions. Insurers point out that as the scheme is voluntary, those suffering from existing illnesses would have to pay higher premiums than people with no pre-existing conditions, in order to offset the higher cost of healthcare they are likely to require. Existing insurance policies typically handle ‘pre-existing conditions’ by exclusion, moratorium, or coverage with an additional premium.

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Market Overview and Analysis

Many insurers are of the opinion that clients who have pre-existing conditions should pay higher premiums under community-rated or shared-risk schemes. If this is not the case under the proposed government schemes then this is likely to mean that healthy people would have to pay their share of the higher premiums—something perhaps acceptable under a universal mandatory scheme, but obviously not popular under a voluntary scheme.

Unless this key issue can be addressed, with high premiums payable by all parties, it is unlikely that such a scheme will see much uptake at all.

More recently, insurers and members of the medical profession have both expressed reservations about the government’s proposal to set up its own insurance company to compete within the voluntary medical insurance market.

Critics have argued that if the government does embark on taking part in the market, it may be extremely difficult for them to withdraw later on.

Premium adjustments, in subsequent years would also be challenging and highly political—requiring LEGCO approval.

18 |

Moreover, the government is likely to face criticism if its own insurance company generated a profit.

Future One solution may be that the government subsidises the health insurance premiums of individuals with pre-existing conditions, to help offset the higher premiums. However, in doing so, the scheme would then run the risk of becoming very similar to the existing publicly-funded healthcare system.

It is important that the distinction be made that this proposal is only aimed at voluntary private medical insurance, rather than being an extension of the whole healthcare system for Hongkongers.

With the introduction of the proposed government schemes and resultant competition in the market, this will certainly be beneficial for end users. The government, however, needs to be extremely careful in deciding whether the scheme will be wholly run on commercial principles or will be run with a public subsidy element.

Market Overview and Analysis

Private health initiatives in Hong Kong |

By Carl Redondo, Regional Benefits Consulting Leader, Hewitt Associates, Hong Kong

HK$50 billion to seed new private healthcare system in Hong Kong A cornerstone of Donald Tsang's 2009-10 policy address in October 2009 was the plan to introduce a supplementary healthcare system for Hong Kong. The Government is to provide incentives and subsidies to the system to total HK$50billion under the umbrella of healthcare reform. The sums involved are significant and the ambition of the system is both exciting and bold. To quote directly from the policy address: "This [private healthcare] option will enable a wider choice of private healthcare services for those who can afford it, in particular those who are covered by health insurance. The

new option will ease the burden on the public healthcare system and make it more sustainable.

At the same time, we will explore how best to strengthen the public healthcare safety net to offer greater protection to patients who need costly medication and treatment".

The announcement in the policy address was built on a comprehensive public consultation carried out by the Food and Health Bureau from March to June 2008. This study shone a light on the concerns of the Hong Kong public as well as taking their opinions on known healthcare issues like aging populations and increasing medical costs.

The study then went on to lay out the key areas of the system that needed to be reviewed and a

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Market Overview and Analysis

recommendation for further public consultation.

The policy address endorsed this study, committed to the development of the system and kicked off the latest round of public consultation.

as to the key characteristics to be considered in the formulation of the specific system design. These areas were:

2008 consultation: private healthcare for the public

1. Individualism – in line with the broad culture of Hong Kong, much of the public opinion favoured individuals being able to select coverage that suited their needs and affordability. Although taxation should be used to ensure basic coverage, individuals should then be able to differentiate according to their means and needs

Healthcare reform is a hot topic in most major global economies at the moment and it was no surprise to find the Hong Kong public well versed in the major issues. The three areas driving transformation in global healthcare are:

1. Rapidly aging populations in most developed economies

2. The increasing occurrence of lifestylerelated diseases

3. Rising medical costs due to advancement in technology

All of these issues are relevant for Hong Kong and in fact the aging population issue is as severe in Hong Kong as anywhere in the world. The other Hong Kong-specific factor that was mentioned is the relative lack of social security which leads the public at large to save excessively to protect against catastrophic healthcare needs in old age. There was wide recognition from the public that the current healthcare system needs to be reformed to keep pace with changes in the external environment. The public recognised that the current public financed system was unsustainable and that individuals should take more responsibility for their healthcare costs —particularly in relation to lifestyle-related diseases.

Given this platform of broad agreement for reform, the consultation then gave a strong steer

20 |

2. Voluntary – the public gave clear guidance that the system should be introduced as voluntary. The public felt that the government’s role is to structure the system such that it encourages rather than forces participation.

3. Risk pooling – one of the biggest concerns from the public is how to cope with catastrophic healthcare needs. Many of the public currently save significant amounts of their income to protect against this situation and would welcome an opportunity to pool this risk efficiently.

Private healthcare is coming: but more consultation first The headlines last October made it seem that Hong Kong was on the verge of groundbreaking healthcare reform but that has not been the case.

In recent months, the government, via the Food and Health Bureau, has begun a further round of public consultation to support the detailed system design.

The public and the medical profession is being asked to help ensure the system is a success. As a voluntary system, participation will be a key success factor. The system will need economy of scale to make it attractive to providers and users.

As a result, the government wants to make sure the

Market Overview and Analysis

services, subsidies and incentives make it attractive to the public. The flip side to this is that the system needs to be independently sustainable in the long term otherwise it just becomes a different version of public healthcare.

The government is also hoping that the introduction of a market based system will support the introduction of innovation and competitiveness that is absent from the current market. This requires firstly the participation of the medical providers as well as a regulatory framework that supports innovation and competitiveness. The government is working hard to ensure the medical professions – both academic and commercial – take an active role in designing the system.

A gaze into the future: older but healthier Healthcare reform is tough to implement and just as tough to get right. Hong Kong has more chance of making it a success than many countries for two reasons: • a manageable yet sizeable population; and • deep government pockets.

Almost all business models benefit from economies of scale up to a point before then suffering from diseconomies of scale. Healthcare is no exception.

Hong Kong currently has some of the best "healthcare per dollar" in the world suggesting that the population is close to the right size for implementing effective healthcare systems. The new system should be able to get participation high enough to be competitive whilst remain small enough to keep the costs of regulation and/or management low.

Most countries are looking to implement healthcare reform as part of broader cost cutting exercises. This influences public perception and the example of US healthcare reform highlights how sensitive an issue this can become. This is unlikely to be the case in Hong Kong. The level of overall government budget surplus is well documented and it is likely that the government can and will commit subsidies to ensure the system has every chance of succeeding.

The system itself is undoubtedly going to be voluntary and likely to combine a savings component with access to insured components to provide more

efficient catastrophic cover. Hewitt is in favor of combining the healthcare system with the existing MPF retirement system to generate immediate economies of scale and operational efficiencies. This combination would also rightly blur the lines between the false distinction of "retirement" and "healthcare" savings.

As a voluntary system it is difficult to force employers to contribute to the plan although we hope the system will be open to employer contributions. We would encourage employers (depending on the design of the system) to look to contribute to the system on behalf of their employees. Healthcare is the most valued benefit by employees and so any employer spend to the system is likely to be see a positive response from the workforce.

Hong Kong already boasts the second highest life expectancy in the world, improving the healthcare system looks set to increase this even further. We look forward to the end of consultation and the start of the reforms.

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Market Overview and Analysis

Global business risks relating to employee health |

By Susan DeGregorio Consultant, Global Health Management Hewitt Associates, Pittsburgh

Developing a global health strategy The recent debates on healthcare reform in the United States and Europe highlight that no country or system can adequately meet the challenges of adequate, efficient, and cost-effective healthcare provision.

As governments around the world warn their citizens that in a few years they may not be able to provide the level of healthcare that is expected or demanded, more and more individuals are turning to their employers as an alternate source of coverage.

However, employers are struggling to define their role in safeguarding employees’ health. Human resource and finance leaders report that their ability to control their healthcare strategy and costs around the globe is rapidly slipping away.

To counter this trend, organisations have been moving toward more corporate oversight and consistency in the design and delivery of global healthcare programmes. They also are reconceiving their role with regard to employee health, realising that it does not end with the effective management of healthcare benefits. Employee health is a critical business risk that must be managed comprehensively—the healthcare benefits that an organisation offers through its insurance programme

22 |

are simply one of many initiatives used in an effort to manage the broader business risk.

The World Health Organisation’s (WHO) definition of health is “a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.” In other words, the health of individuals—an organisation’s employees—is defined by their general well-being in terms of body and mind. The role of an organisation in manageing the business risk of employee health is extensive— requiring a sustained commitment to the recognition of the risk and the development of a strategy and resulting initiatives to mitigate it.

In a global healthcare survey conducted by Hewitt Associates, almost all employers (92%) believe that employees are responsible for their health, but this responsibility is not theirs alone. As shown in Table 1, 72% of employers indicate that they should share in this responsibility (49% of respondents state that the responsibility should be shared equally between the employee and the employer and 23% believe that the government—in addition to the employee and employer—should bear a portion of the responsibility).

To understand why organisations invest in the development of global health strategies, the survey

Market Overview and Analysis

Table 1 | Employers’ views of employee health responsibility Belgium

Brazil

Canada

India

Ireland, Rep. of

Mexico

South Africa

UK

All*

%

%

%

%

%

%

%

%

%

0

0

0

0

0

0

0

0

0

The employer should be primarily responsible

25

20

0

0

0

0

20

0

8

The employee should be primarily responsible

0

20

33

25

50

25

40

0

21

Responsibility should be shared equally by the employee, the employer and the government

25

0

33

0

0

50

0

44

23

Responsibility should be shared equally by the employee and the employer

50

60

33

75

50

25

40

56

49

The government should be primarily responsible

* This average represents data for all the countries in the survey and not just for the eight countries included here.

Source: ‘Global Viewpoint: Health and Productivity’, Hewitt Associates, 2007.

asked employers to identify their expectations of their global health strategy and the resulting initiatives relative to benefits to the business. As shown in Table 2, employers report that they expect their efforts to reduce employee absence, increase productivity, and enhance employee morale in addition to controlling their healthcare costs. If an organisation is able to improve the overall health of its workforce, broad benefits for the organisation should be realised.

developing an implementation plan for global and local initiatives, it is essential that organisations focus on more than employee headcount. Other factors such as the overall health status of the population, accessibility of the public health system, as well as the quality and availability of health insurance products should all be considered. The following examples illustrate how existing healthcare infrastructure and initiatives can vary by country.

Developing global health initiatives

United Kingdom

Many organisations have global benefit philosophies or strategies. A global health strategy is a set of company principles and guidelines specific to health and health improvement.

An effective strategy, however, goes beyond this—it focuses on employee health and health improvement that will enable the organisation to compete effectively in attracting, retaining, and motivating the best talent, as well as decrease health risk and improve productivity over time.

Organisations may have both global initiatives that are implemented in multiple countries (such as a global Employee Assistance Programme), and local initiatives designed to meet specific country needs. When

Currently, stress is the headline issue affecting healthcare in the United Kingdom. Outside of seasonal illnesses (such as colds and flu), stress, anxiety, and depression are the primary causes of workplace absences. The causes of stress are not always workplace related—healthcare industry analysts estimate that only 18% of cases involve issues arising from work. For the rest, stress emanates from the pressures of modern living— debt, relationships, family care, and the fear of unemployment. According to the UK’s Health and Safety Executive (HSE), four out of every ten days’ absence in 2007/2008 were linked to stress or were workplace related. The National Institute for Health

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Market Overview and Analysis

Table 2 | Employer expectations of global health strategies Belgium

Brazil

Canada

India

Ireland, Rep. of

Mexico

South Africa

UK

All*

%

%

%

%

%

%

%

%

%

To improve employee morale

100

40

83

50

100

25

100

89

74

To increase productivity

100

60

83

100

50

25

80

78

74

To reduce employee absence

100

60

100

75

100

25

80

89

79

To differentiate the workplace

75

60

100

75

50

0

20

67

59

To reduce healthcare costs

50

60

100

75

0

25

80

56

62

0

40

0

0

0

0

0

22

10

Other

* This average represents data for all the countries in the survey and not just for the eight countries included here.

Source: ‘Global Viewpoint: Health and Productivity’, Hewitt Associates, 2007.

and Clinical Excellence estimates that mental health conditions are costing UK employers over £28.3 billion (US$43.9 billion) per year. This figure includes the costs of pay, lost productivity, and replacement of employees.

To respond to stress-related issues, typically an Occupational Health or Employee Assistance Programme (EAP) has been used. However, according to a recent UK case law, the provision of an EAP may not be sufficient—employers may have to take action to deal with stress if a problem is known to exist.

The use of stress vocational rehabilitation services, which are psychologist-led, is proving to be effective, producing a 40% reduction in stress-related absences during the first year of implementation.

India Employee health risks in India are converging with those in the advanced industrial economies. The rates of death and disability from chronic disease due to lifestyle issues are rising, overtaking the rates from communicable diseases. As the public health system was established to address infectious diseases, it is ill-prepared to handle the increase in these new challenges and is relying on the private sector to provide solutions.

In 2005, India’s estimated loss of national income from heart disease, stroke, and diabetes was equivalent to US$8.7 billion. In 2015, the estimated loss of national income is forecast to exceed US$54 billion, or around 1.3% of GDP.

24 |

Employers experience these losses first—through elevated healthcare costs and lost productivity.

Progressive employers have initiated wellness programmes which have gone beyond providing a gym or doctor on-site. They include providing fresh fruits along workplace corridors and arranging face-to-face consultations with fitness experts and dietitians. Other employers have started to work with independent wellness solution providers to help employees quit smoking, manage alcohol consumption, and cope with stress.

Brazil Brazil has a national healthcare programme, with all clinical, surgical, maternity, and dental services provided for all citizens from governmentapproved centres; however, government medical services are severely oversubscribed, understaffed, underequipped and underfunded.

In response, a private healthcare system, similar to that in the United States grew in the country; the system is largely company-sponsored. With rising healthcare costs and rates of chronic disease spiraling, cost-containment approaches similar to those used in the United States are being tried in Brazil, including health management-like organisations and managed care. The leading causes of death are chronic disease, notably heart disease and diabetes, and violence.

Company-provided medical, dental, and hospital services are not taxable to the employee.

Market Overview and Analysis

Company-paid premiums can be deducted from taxable income. Aside from the provision of health insurance, employers in Brazil are investing in wellness and prevention programmes, health education, and improved communication with employees on healthcare.

The most common wellness programmes include regular wellness handouts on nutrition, heart disease, diabetes, chronic disease control, stress and fitness. To encourage employees to see a doctor, many employers make their on-site occupational health and safety physician available for routine visits and second opinions and provide gym memberships. Given the importance of cash benefits in Brazil’s compensation culture, employers find that financial incentives to take annual physical exams are popular among employees.

Measuring success Organisations that have implemented strategies to manage the health of their employees are measuring the impact of these strategies. According to Hewitt Associates’ Global Viewpoint Survey, 57% of companies measured the success of their health improvement programmes. Methods include measuring production volumes; evaluating employee absence statistics; reviewing employee satisfaction survey data; tracking employee participation in programmes; collecting employee feedback; and charting changes in health risk measurements.

Often when an organisation reports measuring success by evaluating changes in health risk

measurements, it has adopted a Global Health Risk Assessment (or Personal Health Assessment) tool to collect data from employees on their general health and well-being. One of the primary benefits of operating this type of tool globally is the collection of consistent data on the health of an organisation’s population that can be used to establish a baseline metric and can be conducted regularly in order to track progress.

Summary Employee health represents a significant business risk, and many employers have heightened their oversight of, and involvement in, the management of healthcare benefits. They are starting to recognise the limitation of a global strategy that focuses too much on the level of health insurance benefits offered to their employees at each location and the hard costs associated with these benefits.

Often the needs of healthcare programmes will be determined by specific health factors at the country level, and require initiatives tailored to suit.

Having an effective global health strategy helps bring consistency to this decentralised approach, and ensures that the benefits put in place align to the organisations wider business needs. Beyond this, a well thought-out global health strategy affirms the corporation’s commitment to the health of its global workforce, and sends the message that governments, individuals, and businesses all have a role to play in the healthcare challenges that the world faces.

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Market Overview and Analysis

HR Magazine/Hewitt Medical Insurance Survey Analysis of key findings | HR Magazine and Hewitt Associates surveyed HR managers and HR directors, in a series of HR Magazine Conferences, to gauge their opinion on medical insurance plans adopted by their organisations. The questionnaire focused on two key areas: • Top criteria in selecting medical plan providers • Predictions on spending on medical plans in the short and long term.

The majority of respondents were from finance, securities & banking, transportation & logistics,

leisure & entertainment, trading, construction & engineering and FMCG industries. Other industries polled included hi-tech, textile & apparel, education and telecom [see Chart 1].The size of respondent companies was quite evenly spread between different sizes of enterprises [see Chart 2].

Although corporate medical plans are provided in the name of the employer, most programmes are actually one-on-one relationships between the vendor—the medical provider, and the end user—the

The overwhelming majority of companies surveyed are providing medical benefits to maintain market competitiveness with over half stating that such benefits are essential to keep employees at work and productive [see Table 1 below].

Table 1 | Reasons companies provide medical benefits

26 |

Market Overview and Analysis

arena of providing a comprehensive range of workplace benefits, and it is not surprising to see that many companies offer health benefits to ensure market competitiveness, 78%. However, combined with the 54% response rate for companies citing healthcare programmes as a means of ensuring employee productiveness, and it can be seen that private healthcare has evolved from simply being a ‘company perk’, to becoming a key tool to achieving business goals.

When it comes to selecting providers, annual premiums remain, as expected, a paramount consideration, 81% [see Table 2]. But as the cost of private healthcare steadily rises to become a major expenditure, Employers are also placing emphasis on value-for-money; weighing up features of each provider’s offering such as the level of claims

Chart 2 | Percentage split by number of employees

individual employee. Whether it is clarifying eligible treatments or submitting claims for reimbursement, on a practical level the employer’s responsibility often ends with the selection of the plan and the payment of the annual premiums. Nonetheless, as gatekeeper it is important to look at what the key factors are in driving HR managers when it comes to making decisions over the company’s medical plans.

The so-called war for talent has long moved beyond just cash compensation and into the

Chart 1 | Percentage Split by Industry

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Table 2 | Top criteria in selecting medical plan providers

allowed, 48%, and the size of the provider’s network, 34%.

Overall, the survey suggests that most companies are satisfied with their current medical provider, 79%. However, almost threequarters indicate that they plan on reviewing their providers in the next 12 months, 72%.

Although this may seem counterintuitive, it could be explained by the difference in the provider’s relationship with the employer, who buys the policy, and the employee, who uses it. The employees’ experiences with the provider— which should be the key measure of satisfaction—does not always filter back to directly influence the company’s choice of keeping or changing the provider. Conversely, most medical providers fall into the category of vendors and are often reviewed annually by companies as part of the standard procurement policy, regardless of whether there have been any particular service quality issues.

One of the most revealing set of figures from the survey was the question that addressed short and long-term organisational

28 |

Table 3 | Split in usage of different medical providers

Table 4 | Satisfaction with different medical providers

spending plans on medical coverage, Table 7.

Only 21% of respondents plan to increase their companies medical plan budgets over the next fiscal year, while almost three-quarters, 73%, stated they have no intention of increasing their healthcare insurance budgets over the same period.

Just 2% of organisations said they would consider cutting the budget over the next year.

The Hong Kong Federation of Insurers recent in-principle decision to extend cover to preexisting conditions and mental illness is likely to increase the cost of company health insurance and the need for HR practitioners to shop around more carefully to find a health insurer that suits their company’s specific needs and offers value for money.

On a scale of 0 to 3.5, most of the medical providers received a satisfaction score around or just below Table 5 | Satisfaction with current medical providers 3.0 [Table 4]. Cigna stood out with the highest satisfaction score of 3.33.

AIA and Generali scored next best with ratings of 3.14 and 3.10, respectively.

While Cigna enjoyed a high satisfaction rating, this was not reflected in its recognition as a medical provider—it has a relatively low usage rate in the healthcare market in Hong Kong of just 2% [Table 3]. Of the nine medical providers listed in the survey, the largest Table 6 | Likelihood of reviewing medical providers in market share was held by AXA, 21%, the next two years followed by AIA, 16%, Bupa, 13%, Manulife, 12% and Bluecross, 10%.

It will be interesting to see how these percentages shift in the next few years as the Hong Kong Government enters the arena as a healthcare insurance provider. Private medical providers will need to keep on their toes to keep up in what promises to be a more competitive Table 7 | Short and long term organisational spending healthcare insurance landscape. Over plans on medical coverage 70% of organisations surveyed admitted they are likely to review medical providers in the next two years.

Finally, the reasons that companies provide medical benefits were found to be overwhelmingly market focused—with almost 80% stating market competitiveness was the main driver [Table 1]. While over half of the organisations surveyed recognised that offering effective medical benefits was essential to keeping employees at work and productive.

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Rise of staff medical insurance costs in Hong Kong 2010 health insurance benchmark summary | Companies in Hong Kong are already paying too much for business medical insurance and their costs are set to increase further over the coming year, according to research carried out by Alliance Insurance Services. Over the last five years medical insurance premiums have increased by around 90% making Hong Kong one of the most expensive places in the world for full cover private medical insurance, and with the financial crisis strangling many companies, business leaders are starting to question how employee benefit savings can be made.

Over 80% of HR professionals renew their company’s medical insurance annually without discussing premiums or cover with alternative

30 |

providers which ultimately leads to inflated prices and in many cases, reduced levels of cover and service. By negotiating, companies can also take advantage of benefit and service enhancements offered by many insurers. Additional benefits including online claims, cashless direct settlement and cover for pre-existing medical conditions will often be included and should be automatically suggested by insurance brokers.

The study, which evaluated the insurance programmes in place at businesses located throughout Hong Kong, found that dramatic savings could be achieved while maintaining the highest levels of cover and service simply by discussing

arrangements with alternative insurance brokers. Mike Ramsay, Client Relations Director at Alliance Insurance Services, said: “Companies that call around can reduce their costs dramatically while maintaining or even increasing their benefits. Brokers that specialise in corporate medical insurance are likely to have agreements in place with insurers which mean they can negotiate the best products and services at the best price. With Alliance, we have even been able to guarantee specific discounts with many of the insurance companies to ensure our clients can reduce their costs easily.”

Greater demands for higher levels of cover and service, increasing medical inflation and mounting pressure to reduce costs has thrown the Hong Kong health insurance industry into a race to exceed the needs of companies.

2009 demonstrated that insurance providers can meet these challenges and saw a variety of product, price and service developments introduced to the

“

Companies that call around can reduce their costs dramatically while maintaining or even increasing their benefits.

”

market place. Alliance Insurance Services examines what health insurance plans are being implemented by companies in Hong Kong and the products and services that are being made available by insurers.

Hong Kong health insurance benefits Companies in Hong Kong continue to differentiate benefit levels split by employee grade, however, 2009 saw significant changes in corporate attitude in a number of key areas, these include: • Home healthcare benefits • Increased Chinese medicine practitioner visits and cover levels • Inclusion of routine physical examinations The following table shows average benefit levels and covers provided by companies with more than 50 employees in Hong Kong. Data is taken from the Alliance Insurance Survey of 250 companies providing local Hong Kong health insurance to employees as an employee benefit.

• Executive Plus: senior managers and directors • General Executive: middle managers and specialist employees • General Staff: administrative, support and entry-level positions

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Market Overview and Analysis

Table 1 | Group medical insurance—benefits comparison Executive Plus

General Executive

General Staff

2,000

800

500

45

45

45

30,000

20,000

8,000

Complex operation

200,000

100,000

40,000

Major operation

100,000

40,000

20,000

Hospitalisation Daily room & board per day max. no. of days per disability Hospital special services per disability Surgical fee, per disability

Intermediate operation

50,000

25,000

10,000

Minor operation

20,000

10,000

5,000

15,000

Anaesthetist’s fees, per disability Complex operation

60,000

30,000

Major operation

30,000

10,000

7,500

Intermediate operation

15,000

4,500

3,750

6,000

3,000

1,875

Minor operation Operation theatre fee, per disability Complex operation

60,000

28,000

15,000

Major operation

30,000

11,000

7,500

Intermediate operation

15,000

4,500

3,750

6,000

3,000

1,875

2,000

800

500

Minor operation In-hospital physician's visit per day max. no. of days per disability

45

45

45

10,000

8,000

1,500

max. no. of days per disability

30,000

20,000

10,000

Home healthcare

39,000

15,000

N/A

800

500

N/A

In-hospital specialist's visit Intensive care

Private nursing Max. days per disability per year Hospital cash benefit

45

45

N/A

750

400

N/A

max. no. of days per disability

91

91

N/A

Post-hospitalisation treatment

5,500

4,000

N/A

Max. no. of days from day of discharge

30

30

N/A

Worldwide emergency assistance Medical evacuation / Repatriation

YES

YES

YES

200,000

100,000

50,000

Supplementary major medical SMM benefit max. benefit per disability

32 |

Market Overview and Analysis

Deductible Co-insurance

Executive Plus

General Executive

1,000

1,000

General Staff 500

80%

80%

80%

500

280

200

Outpatient coverage Outpatient physician's visit per visit, per day max. no. of visits per policy year reimbursement %

30

30

20

100

100

100

500

400

200

Physiotherapist's or chiropractor's visit per visit, per day max. no. of visits per policy year reimbursement %

30

20

10

100

100

80

600

400

300

Outpatient specialist's consultation per visit, per day max. no. of visits per policy year reimbursement %

30

20

10

100

100

80

250

200

150

20

15

10

100

100

80

3,600

2,000

1,000

100

100

80

Chinese medicine practitioner's visit per visit, per day max. no. of visits per policy year reimbursement % Outpatient X-ray / Laboratory test limit per policy year reimbursement % Routine physical check up Per visit, per day limit

500

300

N/A

reimbursement %

100

100

N/A

4000

3000

N/A

Dental insurance Routine oral examination, scaling, polish intraoral X-ray & medications fillings & extractions drainage of abscesses pins for cusp restoration dentures, crowns and bridges

Additional notes: Maternity benefits: Cover for routine pregnancy and childbirth continues not to be a priority under corporate health insurance plans in Hong Kong.

Health checks: Routine physical examinations are playing a larger part of the group health insurance plans with many companies seeing them as an opportunity to proactively manage healthcare needs while providing additional cost controlling benefits.

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Market Overview and Analysis

Table 2 | Services provided from top local Hong Kong health insurance companies AXA China

Falcon Insurance

Mass Mutual

Liberty International

AA

A-

AAA

A

-Claim submission

Y

N

N

N

-Claim tracking

Y

N

N

N

Insurance rating Online claims

-Email claim payment advice

Y

Y

Y

Y

-Online claim enquiry

N

N

N

Y

-Tailor made claim form

N

N

N

Y

1,000 GP/300 SPHMMP/QHMS

1,000 GP+SPHMMP/ QHMS

2700 GP+SP QHMS/HMMP/ UCMG/UMP

1,000 ClinicsUMP & QHMS

-In-patient

14-17 W/D

15 W/D

10 W/D

10-16 W/D

-Outpatient

7-14 W/D

10 W/D

7 W/D

10-16 W/D

IPA

IPA

IPA

SOS

-Claim reports

Y

N

Y

N

-Benefits schedule

Y

N

Y

N

-Member details

Y

N

Y

N

-Newsletter

Y

N

N

N

-Claim form download

Y

Y

Y

N

-Premium payment history

N

N

Y

N

Y

Y

Y

Y

-Credit Card

N

N

N

N

-Cheque

Y

Y

Y

Y

-Bank Transfer

Y

Y

Y

Y

-Standing Order

N

Y

N

N

Y

N

N

N

Medical network -Hospital -Panel doctor Claims turn around time

Emergency assistance provider

Online employer access

Member Advice Hotline

Method of Payment

Group-Individual Transfer

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Market Overview and Analysis

Although local health insurance companies prefer to restrict benefit levels, recent years have seen considerable flexibility from providers in tailoring to the needs of a specific company. It has never been easier for companies in Hong Kong to shop around and make like for like comparisons as most insurers, on the whole, will be able to reflect their existing and future benefit requirements. This ability has placed more emphasis on price and service as the primary decision factor for companies when choosing their provider.

Hong Kong health insurance services With local health insurance providers demonstrating similar abilities in matching a company’s existing benefit schedule, many have found service provision as a key area to differentiate themselves from the competition.

Certainly 2009 brought with it a number of developments among providers and transformed the way in which the day to day running of an account is carried out. The main area of progression being the development and launch of online facilities that allow both the member and the company to monitor their insurance plans at the touch of a button.

Website facilities have proven a big hit with group administrators and have empowered them to proactively manage their health insurance arrangements. Downloading benefit details, claims reports and premium payments can be carried out without delay and detailed statistical analysis can assist administrators to make informed decisions at renewal.

Table 2 opposite shows services provided from top local Hong Kong health insurance companies.

International health insurance benefits Traditionally a preferred option of individual expatriates, global health insurance benefits have gained in popularity among companies not only employing expat staff, but also with senior executive local nationals that carry out overseas assignments or feel local benefit levels do not reflect their medical needs.

With significantly higher benefits and the freedom to choose a medical treatment facility anywhere in the world, international health insurance has always

been a tempting alternative to the local national healthcare plans.

In Hong Kong, European style products have been made available to companies, perhaps another British colonial influence. Although providing a full cover payment for inpatient and outpatient medical costs, they have traditionally been of a reactive insurance style, only making payments in the event of a covered injury or illness and have also included significant exclusions within policy wordings relating to congenital, hereditary, chronic and terminal conditions.

Recent years have seen a more proactive health management style introduced to policies with the inclusion of wellbeing, health checks and vaccination benefits coupled with access to chronic condition management and hospice care.

2009 also saw the launch of two Americanised products in Hong Kong for the first time, with Aetna Global Benefits and Cigna International opening their doors to the local market and bringing with them increased benefits which include as standard; congenital, hereditary, chronic and terminal condition cover, cover for preexisting medical condition and a suite of wellness programmes to cater for high flying executives.

The following table includes details of the standard cover included with three of the major international health insurance plans available to companies in Hong Kong.

International private medical insurers have also been quicker to adapt their terms to market demands influenced by global events and circumstances. Many have loosened their stance on war and terrorism and with the outbreak of H1N1, companies like Cigna International and Aetna Global Benefits have indicated coverage for H1N1 vaccinations under their standard group plans.

Whether it is COBRA compliance, Australian Medicare compatibility, or tailored benefit schedules specific to the demographic of a company’s employees; group health insurance purchasers now have greater choice in the market and have the ability to adapt their insurance purchase to their needs.

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Market Overview and Analysis

Table 3 | Details of the standard cover in Hong Kong

Currency Annual Limit

AETNA - IHP

INTERGLOBAL

HK$

HK$

CIGNA INTERNATIONAL HK$

12,400,000

26,400,000

58,200,000

In-patient (Hospitalization)

Full Cover

Full Cover

Full Cover

Outpatient (GP, Clinic, Specialists)

Full Cover

Full Cover

Full Cover

Organ Transplant

Full Cover

425,000

Full Cover

Oncology

Full Cover

Full Cover

Full Cover

Acute Full Cover Palliative 15,000

Acute Full Cover Palliative 102,000 lifetime

Full cover

Full Cover

Full Cover

Full Cover

Hormone Replacement Therapy

Full Cover up to 18 months

255

Full Cover

Traditional Chinese Medicine

30 per session up to 10 sessions

3,400

Full Cover

Home Nursing

Full Cover

8,500

Full Cover

Annual Medical Check-ups

No Cover

Vaccinations

No Cover

Congenital Conditions

No Cover

Chronic Conditions In-patient Psychiatric Treatment

850

450 Full Cover

No Cover

Full Cover

Hereditary Conditions

No Cover

No Cover

Full Cover

Emergency Dental Treatment

Full Cover

Full Cover

Full Cover

1,275 With co-insurance

3,000 With co-insurance

6 Months

No Waiting

Dental Routine Dental Treatment

700 With co-insurance

Major Dental Treatment

1,500 With co-insurance

Dental Waiting Period

9 Months Maternity

Complications to Pregnancy Routine Maternity

Full Cover

Full Cover

10,000

8,500

Full Cover

Services Emergency Evacuation

Full Cover

Full Cover

Full Cover

Administration Centre

Hong Kong

UK

Hong Kong

Direct Billing

Direct Billing

Direct Billing

No

No

Yes

Claims Handling Outpatient Online Claims

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Market Overview and Analysis

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37

Industry Perspectives

Industry perspectives Introduction | In this section we interview two representatives from the insurance industry to learn more about what key points HR professionals should look at when selecting a group health plan for their company.

Axa’s Luzia Hung advises that in order to lower premiums HR directors can make

38 |

practical adjustments to their internal policies. One example cited of such an adjustment involves doing away with one-day mandatory sick leave certification. To ensure that policies meet employee needs Hung advises HR to design health benefit packages around employee surveys. The second

perspective comes from Brock Judiesch of Cigna International Benefits. Judiesch shares his insight on the industry as a whole and the recent shift of companies into the Asia Pacific market. He also explains the increasing trend in partnerships between insurers and healthcare providers in the creation of direct billing networks.

Industry Perspectives

Healthy staff‌ healthy business

AXA |

Luzia Hung, Chief of Pension & Group Business, AXA China Region Insurance Company Ltd.

Employee healthcare is something all HR managers need to take seriously.

In a rapidly developing knowledge economy such as Hong Kong, businesses can only thrive if their staff are looked after and kept healthy.

One of the aims of the HR Guide to Corporate Medical Insurance is to help HR directors implement the best health insurance plans for their staff. Healthier employees leads to lower absenteeism, greater staff engagement and ultimately better business performance.

We interviewed Ms Luzia Hung, a leading authority on Hong Kong medical insurance. Hung has over 20 years of experience in the pension, insurance and financial markets in Hong Kong and is currently the Chief of Pension & Group Business, AXA China Region Insurance Company Limited.

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Industry Perspectives

Where does health insurance fit into AXA’s overall coverage?

AXA has been involved in the medical insurance business since 1991 when it acquired National Mutual.

AXA has been building the medical insurance business on top of this acquisition. We currently have about 118,000 members in our healthcare portfolio.

How has the medical insurance market developed in Hong Kong?

Medical insurance in Hong Kong has seen steady growth over the past ten years, particularly in the last four to five years. This has occurred partly because of the government campaign on healthcare reform, which has really raised a lot of awareness within the Hong Kong community.

Another factor would be the ageing population.

All of the baby boomers are ageing, becoming increasingly aware of their health, and have higher expectations of healthcare in general.

More recently, as new medical procedures and inventions are increasingly expensive, the cost of delivering care has increased. This, in turn, has driven up expenses for all participants in the medical industry.

Did last year’s global financial crisis have a significant impact on the medical insurance market in Hong Kong?

I don’t think the financial crisis impacted the medical insurance market as much as it impacted other markets such as investment banking. Those who had already purchased coverage—anticipated it as a fixed cost that they would have to contribute to year after year. So most people in Hong Kong have not cut this out of their budget, but will instead try to make savings elsewhere.

What should HR managers look for when selecting a medical insurance provider or healthcare plan?

All companies have a budget and must work around this budget. I would advise HR managers selecting a plan to ensure it is cost effective and within their budget, while providing comprehensive coverage.

When deciding upon staff medical coverage, HR managers should prioritise what items are

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the most important in terms of the coverage they need. Priorities may refer to specific needs, or may mean having different coverage levels for staff of different seniorities.

HR managers should also look for methods of monitoring and controlling unnecessary abuse of medical benefits which may be achieved by refining HR policy. I also encourage HR managers to select co-payment plans—especially with regard to outpatient visits. These plans are designed so that staff can share costs by either paying a fixed amount, or percentage of, the fee for each GP or specialist consultation. This method is affordable for both employees and employers, and helps eliminate abuse of consultations merely to get a one-day sick leave certificate.

How can HR managers ensure that the plan they select is the right one for their company?

Every workforce is different, so one must think creatively. Conduct a survey to find out what employees want and need, then design a package that engages them. For example, there has been a growing demand for Chinese medical insurance since the establishment of the Chinese Medicine Council of Hong Kong in 1999 and subsequent regulation of that industry.

Medical insurance is a very competitive market, how does AXA differentiate itself from its competitors?

I feel that AXA’s strength is in our service. We take a consultative approach with HR directors from the start, take time to understand their needs and help them maximise benefits for their staff based on the budget available. We provide ongoing education and updates on coverage to employees through seminars and regular newsletters. It is important for both the HR department and the employees to acquire a high level of knowledge on their respective policies.

We also put a lot of emphasis on our operation’s efficiency and distribution channels to allow easy access to our services for both employers and employees. This also relieves the burden on HR managers of handling employee enquiries concerning medical policies.

Industry Perspectives

What can HR managers do to help lower the costs of their premiums?

One way is to do away with the mandatory oneday sick leave certificate. In most cases, this requirement not only increases the cost to the company and the employee, but may also take employees out of their comfort zone.

If an employee just has a fever, for example, they will probably recover after simply taking rest at home for a day. However, if all staff are required to visit the doctor to get a sick leave certificate, the stress of the visit when feeling unwell, may actually prolong their illness and result in a longer-term cost to the company.

Another way HR can save money is to work with the insurer and analyse existing policy usage with them, for example, AXA will run reports and flag unusual activity. On average an employee will visit a GP seven times a year. So if an employee is visiting more than three times per quarter, it may be an area of concern—they may be very sick and need to be helped further. Catching such incidences in time provides scope to give such staff a more thorough health screening.

“

HR managers should work with the insurers to provide the most cost effective medical solutions to employees according to their priorities.

”

How can HR managers help secure budget for health benefits?

Budgets are still tight in many companies, but HR can use real life examples that show the value of good medical benefits. Senior management should be made aware of greater levels of staff engagement and loyalty that have been derived by providing staff with such benefits. Having healthy staff onboard ultimately facilitates a healthy business.

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Industry Perspectives

Group health insurance: key trends CIGNA | How long has CIGNA been operating in the Asia Pacific Region?

CIGNA has a long history in Asia dating back to the 1930’s. CIGNA first began operating in Shanghai and Hong Kong under the name Ina Corporation.

CIGNA is actually an amalgamation of the Insurance Company of North America, INA, Corporation and Connecticut General which joined in 1982 to form CIGNA Corporation.

Can you tell us about your own background and how you came to work for CIGNA? I grew up in Vancouver, Canada where there is a big Asian population so I got interested in Asian culture at an early age. I’ve worked in various Asian countries over the past 10 years. I’ve been in the Hong Kong Medical Insurance Industry since 2003 and I’ve been in my current position with CIGNA International Expatriate Benefits since 2008.

Brock Judiesch, Sales Director in Hong Kong, CIGNA International Expatriate Benefits

HR Magazine recently had the opportunity to sit down with Brock Judiesch, Sales Director in Hong Kong for CIGNA International Expatriate Benefits to gain greater understanding of the Hong Kong and Asia Pacific health insurance market from the providers perspective.

42 |

How has CIGNA’s strategy changed in the Hong Kong Market?

On the domestic side, CIGNA has been quite successful for many years, but what’s new is that last year we began selling our International Expatriate Benefit plans here which offer more comprehensive coverage in terms of benefits and geography than our domestic plans. It is important to note though, although sales in Hong Kong are relatively new for CIGNA International, servicing

Industry Perspectives

our members here is not, because we already had tens of thousands of members across Asia with a good portion of those right here in Hong Kong.

What are some of the factors attributed to CIGNA’s recent focus on Asia and success here?

CIGNA International first expanded into Europe, then the Middle East and now finally Asia. As in the other markets, we saw an underserved niche here—the very high-end of the medical insurance market—where the coverage is very generous and the exclusions are few. And as Asia continues to grow that niche becomes more and more attractive.

The uncertainty regarding future changes to the medical insurance industry in the US is another reason to look abroad.

What are the biggest challenges for group health insurance providers that operate in the Asia Pacific market?

It is a crowded market, so you need to find your niche and formulate your strategy carefully. Also finding the right staff—people who will emulate the best of your brand, takes a lot of effort.

Last year quite a few expatriates left Hong Kong, has this posed a challenge to your growth strategy?

Thankfully no. We take a long term view and recognise that any drop in the expatriate population

in Asia is a short term blip. That said, what has surprised us is that although we did see some of our clients, particularly in the financial service sector shed staff, many of these people who were let go decided to remain in Hong Kong. They set up their own businesses and they remained loyal to CIGNA and took out new plans with us.

What are some of the recent trends which have been occurring with group health insurance in the Hong Kong market?

There is definitely a growing awareness among HR directors of the importance of having a good health insurance plan, one that can give themselves and their staff peace of mind and even make them an employer of choice. Medical Inflation is also a big and on-going concern. The expansion of ‘networks’ or ‘doctor panels’ will also continue.

What future trends do you see occurring?

As mentioned, the expansion and prevalence of the direct billing networks and partnerships between insurers and providers will definitely continue and I think this is in everybody’s best interest—the medical providers like it because it directs traffic to their facilities, the insurers like it because it allows us to negotiate fee discounts and also to get more easily and quickly involved in the managed care process, and from the member or group perspective they see the

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Industry Perspectives

discounts reflected in their premiums, they benefit from our active involvement in their care and of course they get the convenience of a cashless service.

Technology will continue to transform the industry. Gone are the days when a policyholder submitted their claim into what may have seemed like a black hole and they just kind of hoped that the reimbursement would come out the other side. Now the better insurers empower members to follow their claim process online.

“

...the HR manager has to grapple with the ageold tug of war between benefits and cost.

but a couple times a year because getting people to understand the plan is important. Particularly, what is covered and what is not is of key concern to the employees and time should be spent highlighting issues that really matter, for example, are preexisting conditions covered, yes or no? If yes, what about a pre-existing illness that is also an excluded item? It is important for HR managers to understand and point out likely scenarios.

What are the major conditions that HR managers should look at?

Really HR managers should be conversant with the entire policy or find a good broker who is! Other key items would include the exclusions of course, any geographical restrictions, penalties for not preauthorising treatment etc.

What might HR managers do in the way of precautionary measures to keep staff healthy?

We offer wellness benefits and encourage clients to use these. For example, we cover children’s annual

”

What can HR directors do to work with the insurers to decrease the costs of their premiums?

This is always a challenge if the goal is also to keep benefits and services the same in a medical inflation environment. That said, things can be done including reducing or eliminating unused benefits and educating staff about the advantages of seeking treatment “in-network” as this can have a direct impact on a group’s premiums.

What other ways might HR directors work with insurers?

One way is to run information sessions where the benefits and procedures are explained not just once,

44 |

check-ups and immunisations and we also cover adult’s annual checkups such as mammograms, prostate cancer screenings etc. What we are looking to do going forward, and this is already

Industry Perspectives

being used in some of our other markets, is to offer interactive wellness programmes. In this case we work with the company to bring a provider on site to do fitness assessments and health checks. Based on these assessments a treatment programme or exercise programme is devised and incentives are created, for example a gym membership cost may be borne by the company if an employee meets certain health goals.

What are some of the key factors HR managers should consider when choosing an insurance policy?

I think there are three components to medical insurance. These are service, benefits and premium. I think you can combine two of these, but it is pretty tough to get all three—I mean top

benefits, top service, and low price. I think an HR manager has to be practical and recognise this, but what they have going for them is that it is a pretty transparent market with a lot of competition so if something looks too good to be true, it should raise a warning flag.

Currently what do you see as the main factor driving the types of policies your clients are choosing?

I think one important factor is the seniority of the staff. You may have relatively junior staff blindly accepting the policy chosen by the company, while in many cases the senior staff will actually drive the buying decision. And of course the HR manager has to grapple with the age-old tug of war between benefits and cost.

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Advice for HR Professionals

Advice for HR Professionals Introduction | This guide has so far examined the trends, insights and analysis of corporate group health insurance.

This section, for many, is the most important section as it is a call to action. Practical guidelines are given in this section from independent parties on what HR can, and should, do.

In the first article of this section Carl Redondo of Hewitt Associates gives advice on how HR can ascertain if they are receiving the maximum benefit from their insurance for the money they are spending. Another essential consideration Redondo notes is an optimised policy design.

With regards to an increase in premiums Redondo advises HR to ask for a clear breakdown as to why the premiums have increased.

In designing a policy, Redondo

46 |

advises that coverage for certain diseases and illnesses be reduced or increased to suit the employee population. HR managers are also advised to have a formal three-year review of their medical provider, analyse their claims on an annual basis and establish an employee benefits committee.

The next article in the section explains in greater detail the recent option for companies to use flexiplans as a benefits program for employees. David Moo of Hewitt Associates explains how flexible reward plans can provide employees with an increased perceived value of the benefits programme while also lowering costs for the company.

Also in this section Paul Colley of Zurich gives advice on insurance plans for companies with multiple global offices or with

employees who frequently travel.

He recommends multinational pooling arrangements to align benefits across company locations.

Colley gives additional advice on cost savings where staff can make insurance payments themselves, flexible benefits and implementing wellness programs.

Finally Luzia Hung of AXA gives advice on how employers can provide better coverage for an increasing number of mentally ill employees. Mental illness due to stress and environmental factors is affecting 10% of Hong Kong’s population, however, most group insurance policies exclude mental health coverage. Hung advises HR departments to carefully review the policy terms and conditions to ensure their employees are covered in case of mental illness.

Advice for HR Professionals

Best practises:

great governance of medical plans |

By Carl Redondo, Regional Benefits Consulting Leader, Hewitt Associates, Hong Kong

Introduction The employee benefits market in Hong Kong is straightforward when compared with most other countries in Asia. Employers typically only provide pension benefits, via an MPR of ORSO plan, life insurance and medical insurance as the main benefit programmes. Pension is normally the most expensive benefit but medical is usually the most valued by employees. The pension plan, ORSO or MPF, has a whole regulatory structure to ensure minimum governance standards but no such regulations apply for medical plans.

The cost of providing medical coverage is rising rapidly as the population ages in Hong Kong and more expensive treatments come onto the market.

These rising costs combined with the perceived value to employees are encouraging employers to make sure they are extracting maximum value from their

medical providers. Hewitt is working with a number of companies in Hong Kong who are now looking to build a governance framework around their medical plan to ensure it is both cost effective and providing the most value to employees.

As premiums continue to rise from year to year, the first question that employers are asking is around value for money. What is justifying the premium increase? Does the premium rise adequately reflect the claims experience of the employee population or just general medical inflation trends?

The other major question employers are looking at is around the policy design. Does the coverage provide value to employees? Are the covered illnesses and diseases appropriate for the employee population? Do the policy limits and co-sharing arrangements ensure the policy is effective?

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Advice for HR Professionals

Rising insurance premiums: make sure there is justification The underlying costs of providing healthcare benefits are rising and so it is unavoidable that premiums will rise as part of this trend. The issue that employers need to tackle is ensuring that the rise in premiums reflects the insured population (ie their employees) and not just the general trend of medical inflation.

Many companies in Hong Kong are pursuing "wellness" campaigns to ensure their employees stay healthy and are then shocked when premiums continue to rise in line with overall market trends.

There may be genuine reasons for this, but the key is for employers to make sure they are receiving timely and detailed analysis highlighting why the premiums are rising tied to their own population. Industry best practice is such that premium rises are tied to the experience of the insured population rather than the insurance company's pooled experience.

The implication to this is that once an employer knows why the premium has increased there may well be action they can take to reduce the impact of this particular disease or illness. This is particularly true if claims are related to lifestyle or stress related claims. The company can actively target its wellness initiatives to reduce the claims in the areas associated with premium increase.

48 |

Policy design: one size doesn't fit all It is typical for a medical provider to offer standard coverage terms to new clients. This is understandable and fair. Over time though, the insurance company should be working with employers to ensure the policy design is aligned with the experience of the employee population.

Coverage for certain diseases and illnesses can be reduced or increased to suit the population.

The insurance company should also work with employers to ensure future demographic changes are anticipated. For instance, if the proportion of female workers at the age of 20-30 is increasing then employers may want to improve the level of pregnancy cover offered. Similarly if the workforce is steadily ageing then overall levels of coverage may be increased to suit the needs of the employees.

The other major area of policy design that should be kept under review is the co-sharing and deductible arrangements. These policy levers are used to try and ensure that only genuine claims are made and that there is some disincentive to employees visiting the doctor every time they sneeze. Total claim numbers —particularly for relatively minor ailments—should be monitored from year to year and if there is evidence of an increasing claim numbers then the co-sharing arrangements should be reviewed.

Advice for HR Professionals

Medical plan governance: bringing it to life Employers that we work with are in broad agreement that better governance of employee medical programmes is needed but they lack the structure to implement it easily. Employers often make the comparison with MPF plans which come with a ready built regulatory system and trustees. None of which currently applies to medical plans. We advise our clients to take the following basic steps to building the governance framework: 1. Formal three-year review of medical provider. Insurance companies benefit from inertia in the sense that employers do not like to change things unless they have to. We support this mindset but argue that it is always beneficial to test your provider against the market every two to three years. Employers have a duty to ensure employees are receiving best in class service from their insurance company whilst also providing value for money. Our experience of supporting clients in these types of reviews is that changing the provider is the last resort but the review does ensure your current provider continues to give you the best service they can offer.

2. Annual claims analysis. If medical insurance is purchased via an insurance broker then employers should ensure that the insurance broker provides annual, if not quarterly, analysis of claims trends.

This analysis should go further than just statistical analysis of what claims have been made but should provide advice in relation to coverage levels and co-sharing relationships. This analysis should support the annual premium setting exercise.

3. Establish an employee benefits committee. Many companies already have a pension committee that provides oversight to the pension plans via a series of regular meetings. Our advice is to extend this committee to become an employee benefits committee that also provides regular oversight to the medical plan. The committee would typically meet quarterly or bi-annually and would build a regular series of agenda items as well as taking responsibility for reviewing claims analysis and owning the formal provider review.

Closing comments: lay the foundations ahead of PHI changes With the Hong Kong government committed to introducing a more robust Private Healthcare system in Hong Kong, it is very likely that employer provided healthcare benefits will become more significant in future years. There is also the distinct possibility that the new healthcare system will be combined with the MPF pension to become one single pension and medical system. If this combination does happen then the lines between healthcare and pension benefits will become blurred and the governance associated with pension will become even more relevant to medical plans.

Even without the changes associated with the medical system the costs associated with providing medical benefits are rising each year and we are encouraging employers to manage these costs as they would any other significant cost of their business.

Introducing a relatively simple governance framework allows companies to ensure the plan is effective in the short term whilst laying the foundation to deal with the long term changes that are coming.

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Advice for HR Professionals

Sharing medical costs with employees through flex plans |

By David Moo, International Benefits Consultant, Hewitt Associates

Mention the phrase “cost control” in a typical workplace and you can expect to hear groans.

Employees typically expect that “cost control” involves taking something away from them.

Flexible rewards plans provide a rare opportunity for companies to save money while also providing employees with something that they will value. The employer gains the ability to control ongoing benefit cost increases. The employee gains the ability to optimise their benefits programme to meet their needs—resulting in higher value without an increased cost to the company.

Flexible rewards defined Put simply, a flexible rewards programme allows employees to choose some components of their rewards package. While there are variations, a typical structure in Hong Kong will involve: • Core Package: the baseline pay and benefits components provided to all employees • Flex Credits provided by the company to each individual employee • Flex Options (the “menu” of choices, with prices assigned to each one) • Flex Allocation: the employees allocate their individual Credits to the Options of their choosing.

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Besides the Flex Credits, the employee may have the option of “downgrading” some of the Core Package items and receiving additional Flex Credits to allocate to other programmes.

Within this general framework, the company has the freedom to design the structure however desired. The Core Package may be a “bare bones” set of plans (in which case the Flex Credits are likely to be substantial), or it may match the pre-Flex package (in which case the additional Flex Credits may be very small). Flex Credits can be designed to match the current employee-by-employee cost structure, or they can be designed to incentive or reward employees for behaviours or achievements, service or job-level related, healthy practices incentives, etc., The key is to design a programme that reinforces the company’s employer value proposition, employer brand and company culture.

Cost management Currently, most employers in Hong Kong have little control over their benefits cost. MPF or ORSO contributions are typically tied to employee salaries with many companies paying contributions on actual salaries rather than only salary up to the

Advice for HR Professionals

mandatory cap. The other major category of benefit costs in Hong Table 1 | Percentage of employees with positive perception Kong comes from medical and around benefits 2005-2009 life insurance programmes.

After designing and implementing an insurance programme, the cost of the programme for the future is largely out of the company’s control. While the employer retains the right to redesign the programme, typically any reduction in benefit levels is received poorly by the employees.

Source: Best Employers In Asia Study, Hewitt Associates Thus, even if the company desires to keep insurance benefit costs at a consistent level, if the insurance premiums increase, there are no good options with a Flex is the solution. standard benefits programme.

• Flex increases employee understanding of With a flexible rewards programme, the insurance benefits. There is high correlation between benefits can be one part of the overall package. those who do not fully understand their benefits The company has full control over the amount of programme and those who do not appreciate Flex Credits provided each year. If the insurance it. Flex programmes require employers to premiums increase by 10% but the company only communicate the full benefits programme and increases Flex Credits by 5%, then some of the employees to interact with it regularly. insurance cost increases are shared with employees.

• Flex increases the perceived value of the benefits Some may choose to continue their current programme. An individual employee can direct the coverage and sacrifice some other rewards items, employer’s benefits spend towards the particular while others may choose a less expensive plan. mix of programmes they will value the most.

Either way, they clearly see that their employer • Flex can increase the actual value of the has provided more value to them—and the cost of company’s rewards. Many flex programmes insurance is out of their control. Compare this to a allow employees to purchase insurance, travel, company without a flex system deciding to reduce or many retail products at special group rates. the insurance cover due to high premium increases: • Flex can make employees’ lives easier. At a in this situation, the employees may blame the time when many are “cash-rich but time-poor”, company for the reduction in cover. a well-designed flex plan can allow employees to manage their financial security, travel, and various other items in a convenient, easy-toValue to employees use structure.

The other side of the Flex “Win/Win” is for employees.

Since the typical flex programme will allow We have seen how employees may have to share in employees to at least match their current benefits cost increases in future. But most providers of Flex programme, the transition to flex results in no programmes in Asia and around the world find that employees losing out. As long as the plan is wellemployees’ satisfaction with benefits and overall communicated so employees understand it well, engagement increase dramatically with the introduction the launch of a flex programme can both improve of Flex. Hewitt Associates’ data shows employee employee satisfaction—and thus their productivity— satisfaction with benefits programmes is at very low and allow the company to manage costs. levels—and decreasing, despite increased cost to companies.

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Advice for HR Professionals

Global mobility strategies: health and wellness benefits a must | Its not just about medical insurance It may be the most important aspect, but when you look at mobility as a whole, you have to think about frequent business travellers and commuters, as well as the normal short and long term assignees. This draws you into considerations for business travel, the portability of home insurances and emergency assistance that may be required for remote or dangerous locations.

The UK is hoping that its ‘fit note’ approach will reduce the negative connotations of the old ‘sick note’ approach and get GP’s focusing more on ‘worker return to work’. In the US, President Obama recently passed a bill through the Senate to reform healthcare for at least 40 million Americans who previously had no access to private medical care.

From a global staff mobility perspective, there are some state provided plans that are more internationally mobile than others; you need to be aware of the state

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provision in any country you may operate in and devise your benefit strategy accordingly. In terms of attracting and retaining a mobile workforce, healthcare is right up there with pension, accommodation and education as a key decision-making factor. It’s rarely a deal breaker, but in all its forms, it can be utilised for attraction, retention and engagement purposes.

It is a fact that with improvements in healthcare over the last 30 years, we are all living longer. That, coupled with the reduction globally in birth rates and shortfalls in retirement income, mean that we will be working into our traditional old age, and health and wellness benefits will be of increasing importance as part of a total reward strategy.

It is in employers’ interests to promote wellness and on top of being a valued employee benefit, in most cases access to private healthcare can get people treated and back to work quicker than state provided schemes, so they make good business sense.

Advice for HR Professionals

According to a US survey of 455 employers conducted by human resource consulting firm Mercer and sponsored by Kronos ([R]) in late 2008, unplanned absence was costing firms around 9% of their total payroll budget. With this in mind, it is easy to understand why health and wellness benefits remain popular with employees and employers.

For longer term absence and permanent and partial disability there is the less well regarded (by employees), but in many ways more important, group life and income protection type benefits.

Again these benefits reduce the cost burden of the employer and society and often provide helpful ‘return to work’ strategies as part of the cover. This benefits the insurer, the employer and the employee.

The whole area of health and wellness should be considered as a linked strategy to get the best value from a purchasing perspective and from an employee engagement viewpoint.

Managing global medical insurance arrangements Having been through the tender process for prospective healthcare providers and a number of healthcare strategy reviews, we know it is important to fully understand the requirements of your specific business before you start either. You may find that it is not always the best known provider that offers the right cover for your business or, more usually, location. For example, during a project to open an office in Miami, we utilised the international arm of a well known and reputable UK healthcare provider. However, after experience on the ground and feedback from our assignees we were forced to review our approach. This decision wasn’t based on the level of cover—which was excellent—it was about the clinic and hospital cover of this provider in this US location. In the end we switched to another well known US provider, which was more cost effective and delivered a better all round service.

That said, if you have scale and size it can become costly to manage bespoke arrangements across multiple locations. With a sizeable group of employees, a single or reduced provider set might provide better value and service, as well as global consistency—a key factor in global mobility

programmes. From my own experience I would probably opt for three providers broadly allocated as follows; Europe, Asia Pacific, Middle East and Africa and the Americas, but clearly it depends on the size of company and geographic spread.

A multinational pooling arrangement could be utilised to align benefit levels and service offering across all company locations. Not only do you get more consistency, control and potential cost savings, a pooling arrangement will provide detailed management information (MI). As with Group Life pooling, you can achieve an aggregate level of healthcare cover with the lower cost regions subsidising the higher cost, all with the benefit of localised service provision.

The MI point is an important one and a lower number of providers can achieve this as well. Reducing the number of providers allows the company to identify healthcare hotspots based on claims experience. On investigation this can reveal poor work practices or poor environmental aspects which can be addressed.

This should then lead to reduced premiums and, more importantly, reduced levels and cost of absenteeism.

Quality of MI provision should be a key selection criteria when choosing a healthcare provider.

Company and policyholder administration is also a vital consideration, and most companies these days have web access for in house scheme owners, HR, and the policyholders themselves, employees, with direct billing across a suitable medical clinic and hospital network. Be sure to ask for references and follow them up to check on the robustness of web tools, claims payment process and other aspects of service. Direct billing is great and mostly the way to go, but ensure they have a network of medical providers in the area of your premises and the main residential areas where your staff may live. The last thing you want is to be managing complaints about

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Advice for HR Professionals

coverage or claims payment service; these take up a lot of time and can result in increased cost and reduced staff motivation.

Reducing costs and improving choice Insurance payments by staff are one way of managing claims experience and keeping costs neutral by passing part of any premium onto the individual policy holder. Using claims data in staff communications around benefits can help them understand the link between the costs of the benefit overall and to them personally, and gets them actively involved in reducing the number of claims per policyholder.

Flexible benefits as an approach can help staff benefit from company buying power to upgrade their standard cover. Additionally, flexible benefits are a cost effective way to extend medical cover to the employee’s family, as are other health benefits such as dental and health screening, which might often be costly to purchase on an individual basis.

Promoting wellness is something that has been on the increase over the last decade and has emerged even stronger from the global financial crisis. The concept is to help improve the work life balance and promote good health in employees, which leads to improved engagement and reduced

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unplanned absence through illness. When most companies were forced to cut pay reviews and bonuses, wellness programmes were often kept intact. One employer in Manchester in the UK maintained its free access one afternoon per week to shiatsu massage therapy on site. The company’s dedication to this type of benefit regardless of the recession has ensured they have retained high levels of staff engagement despite cutting pay reviews, bonuses and other benefits. The link to massage therapies and de-stressing is well documented and is a very intuitive benefit to provide in heightened stress situations caused by uncertain financial times.

Discounted or free health club membership is also a popular choice among many businesses and in most cases can cost very little or nothing if you are just allowing staff access to discounted membership.

In the US, obesity and smoking are two significant issues that affect the cost of health insurance, costing 50% more and 25% more respectively than non smokers and normal weight employees. A global hotel chain ran a very successful programme to help staff quit smoking and as well as offering support, nicotine replacements and helpline, to do so, allowed staff to declare themselves smoke free and receive discounted healthcare costs. Interestingly, the declaration was

Advice for HR Professionals

voluntary and not substantiated (so based on trust) and still 22% declared the fact that they continued to smoke, and therefore paid the extra premiums.

Similarly they partnered with Weight Watchers to deliver a 13-week programme to help overweight staff get in shape and lose weight. They reimbursed the staff the cost of the programme for hitting their goals and passed on the costs saving in insurance. After the first six months of running the programme, employees combined had lost over 1,400kg of weight between them. Employee engagement scores were improved and the overall cost of healthcare was similarly reduced.

International group risk benefits As soon as you start to get any kind of critical mass in terms of expatriates, the life, income protection and partial disability benefit provision becomes complex if you try to manage lots of local country plans. It may be possible for the very large conglomerates to do this, although they are most likely use a Multinational Pooling or Captive arrangement.

Alternatively there are international group protection providers that can provide Group Risk benefits to your global expatriate employees through a single policy. This approach improves your administration burden, and more often than not, helps you cover employees across multiple countries, including more high risk areas. This type of plan is mainly aimed at expatriate staff working away from their home country and often does not include cover for employees in China or the US due to local regulatory issues in those countries.

In terms of reducing regulatory and reputational risks, it is important that you have a solution that provides cover for your expatriate workforce.

• Global insurers may be able to offer you both local and international cover and, in some cases, a pooling proposition to consider.

• As with other insurances, always check your requirements and local legislation in the countries in which you operate.

• Take references and check them, this type of insurance generally kicks in after a catastrophe of some type and it is important that the cover you provide as an employer does exactly what you promise.

Price is important in all cases, but the value proposition, in my opinion, outweighs any price bias.

Minnesota Life, the fourth largest Group Risk provider in the US, boasts the highest client retention rate and 99% of customers would recommend them as a provider. They are not the cheapest provider in the market, suggesting that value is more important than pure price based decision making.

“

Price is important in all cases, but the value proposition... outweighs any price bias.

Summary

”

As we live and work longer to finance retirement, health and well being benefits will only increase in importance. As with all things ‘state’ these days, budgets are stretched to the limit, which generally means more input is required from employers and individuals.

For international mobility, especially into emerging markets, healthcare has always been an important aspect, however of increasing importance are the more preventative aspects around health and wellness which is both socially responsible, relatively cheap and known to improve employee engagement.

With 2010 budgets still stretched, it would be a good time to review your health based insurances and wellness programmes to see whether you still have a good fit and best value.

Paul Colley HR Insight & Key Account Manager Corporate Life and Pensions Zurich International Life

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Advice for HR Professionals

Fit minds matter Understanding mental illness in the workplace |

By Luzia Hung, Chief of Pension & Group Business, AXA Hong Kong

Achieving mental health is about striking a balance in the social, physical, spiritual, economic and mental aspects of our lives. With the hustle and bustle of living in the congested city of Hong Kong, you may hardly notice your anxiety turning to distress; until one day, you feel overwhelmed. This kind of mental discomfort is prevalent in Hong Kong, especially in the workplace.

It is worthwhile setting aside time to review the current scope of coverage under your company’s group medical scheme. As part of the review, HR teams should ascertain whether current coverage is comprehensive enough to take care of employees suffering from mental illness.

Mental disorders cause a significant healthcare burden in Hong Kong. Mental disorders took up 23.2% of hospital bed day utilisation in 2000 (Research Office of the Health Welfare and Food Bureau, 2002). In 2003, 15,346 persons were registered with the Hospital Authority as having some form of mental illness, of whom 12,979, 84.6%, had psychotic symptoms.*

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Most importantly, an increasing trend is observed that more and more working people are suffering from mental illness or mood disorders. Relevant treatments to these problems are usually not one-off solutions, but require long-term recovery periods with relatively high medication expenses. Moreover, expenses for treating such diseases are normally not covered by most of the group medical insurance schemes offered in the market.

Some insurance companies exclude mental illness as it does not constitute any visible impairment, and it is hard to measure the status of recovery.

Mental illness in the workplace About 10% of the Hong Kong population suffer from mental illness, with the majority of cases being mood disorders. This concurs with the WHO Health Report 2001, which estimated that mental health problems constituted 10% of the global disease burden. The most common mental illnesses were depression, anxiety, substance abuse and psychotic disorders.

Advice for HR Professionals

Types of mental illness Mental illness can be categorised into several key types, and the most common are as follows: 1. Anxiety disorders: diagnosed if a person’s response is not appropriate for the situation, if a person cannot control their response, or if the anxiety interferes with normal functioning.

Anxiety disorders include generalised anxiety disorder, post-traumatic stress disorder (PTSD), obsessive-compulsive disorder (OCD), panic disorder, social anxiety disorder and specific phobias.

2. Mood disorders: also called affective disorders, involve persistent feelings of sadness or periods of feeling overly happy, or fluctuations from extreme happiness to extreme sadness. Among the most common mood disorders are depression, mania and bipolar disorder.

3. Psychotic disorders: involve distorted awareness and thinking. Two of the most common symptoms are hallucinations—an experience of images or sounds that are not

Insurance coverage for mental illness Increasing work tension and pressure is a major reason for mental ailments. More employees have raised concerns over having no coverage for mental illness under their medical insurance scheme. Employers have thus become increasingly aware of the need to review their policies in this regard.

Doctors in Hong Kong at the same time also advocate that there should be more choices of insurance plans that cover mental illness and employers should subscribe to such plans for their employees. The Hong Kong Medical Association and the Chairman of the Association’s Committee on Rehabilitation have both also urged the government to promote this kind of insurance coverage in the workplace.

In Hong Kong, mental illnesses are generally not covered under group medical insurance policies.

However, certain insurance companies, including

real, such as hearing voices; and delusions— false beliefs that the sufferer accepts as true, despite evidence to the contrary. Schizophrenia is a typical example of a psychotic disorder.

4. Eating disorders: involve extreme emotions, attitudes, and behaviours involving weight and food. Anorexia nervosa, bulimia nervosa and binge eating disorder are the most common eating disorders.

5. Impulse control and addiction disorders: sufferers are unable to resist urges or impulses, and perform acts that could be harmful to themselves or others. Pyromania (starting fires), kleptomania (stealing), and compulsive gambling are examples of impulse control disorders. Alcohol and drugs are among the most common addictions.

6. Personality disorders: sufferers have extreme and inflexible personality traits that are distressing to the person and/or cause problems in relationships at work, school, or in social settings.

AXA, do cover staff treated by psychiatrists instead of psychologists. This is because psychiatrists are registered medical practitioners and are qualified to prescribe medication whereas psychologists are not.

Engaging staff with medical coverage Employers can provide group medical insurance coverage to their employees as an employee benefit to enhance staff engagement and retention. They may also consider including coverage of mental illnesses under such policies, in light of the growing awareness of such conditions, and their association with hectic working environments.

In view of the fact that most insurance policies carry certain exclusion items, mental illness being one of them, employers should regularly review their policy terms. They should pay attention to the exclusions section, to determine whether the current coverage meets their requirements.

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Advice for HR Professionals

Typical major exclusions in medical insurance policies include: congenital anomalies, pre-existing conditions, pregnancy, general check-ups and mental illness. In addition to the exclusion terms, employers should also make comparison of different insurance schemes and providers with regard to the following aspects outlined below.

•

Policy terms and conditions, such as definition of pre-existing conditions & benefit reimbursement

•

Clause for cessation at work i.e. membership termination after the absence from work for six months

•

Geographical limitations

•

Customer service

•

Company background, including financial strengths and industry credentials

Most insurance companies put mental illness under the exclusion section for the sake of keeping the overall premium within an acceptable and affordable level. If an employer considers it necessary to extend the policy’s coverage to include some excluded conditions, they can ask the insurance provider to include such exclusions at a higher premium.

Pregnancy and general check-ups are among the exclusions that employers are most willing to pay

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additional premiums for in order to have them covered.

Once an employer determines the scope of coverage, it is important to ensure that employees have a clear understanding on the inclusion and exclusion items to avoid disputes arising in future.

Employers should disseminate booklets detailing key benefits and coverage of insurance schemes.

It is also recommended to further enhance communication with staff by organising employee briefing sessions to explain scheme features and address enquiries staff may have about the scheme.

Offsite wellness classes on stress management can also assist HR in building stronger and more highly engaged teams.

*Source: Government-funded Mental Health Research in Hong Kong.

Journal of Psychology in Chinese Societies, Vol. 7, No. 1 (2006).

Advice for HR Professionals

Insurance provider overview

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Appendix

Aetna Company Information

Key Features

Telephone (HK) (852) 2860-8021 Member Hotline (HK) Available Fax (HK) (852) 2147 9960 Address Aetna Global Benefits (Asia Pacific) Limited, Suite 401-403, DCH Commercial Centre, 25 Westlands Road, Quarry Bay, Hong Kong Website www.aetna.com Email AsiaPacSales@aetna.com

Products • Hospitalisation, Major Medical, Maternity, Dental , Clinical, ASO Plans, Emergency Evacuation and Repatriation • Aetna also offers a wide array of programmes and services that help manage employee such as case management; disease management and patient safety programmes; behavioral health and disability information

Main Distribution Channels • Broker • Agents • Salaried Agents • Direct

Healthcare Network

Company Profile • Internationally, Aetna provides medical expenses insurance for expatriates and local nationals in more than 100 countries.

• A network of offices in key locations: • Tampa, London, Dubai, Hong Kong, Jakarta and Shanghai.

• Globally, Aetna covers around 19 million medical members.

Background Aetna Global Benefits, the international segment of Aetna Inc., is a provider of comprehensive health benefits solutions to employees in over 100 countries. Founded in the US in 1853, Aetna Inc. is a Fortune 100 company listed on the New York Stock Exchange.

• Hong Kong: Information not available • Global: More than 5,200 hospitals, with over 966,000 healthcare professionals, and 543,000 primary care doctors and specialists

Policy Details • New Policies: Can be set up in 10 working days • Renewed Policies: Can be extended immediately • Renewal Dates: Information not available • Payment Methods: Premiums to be paid by bank, cheque, or credit card • Worldwide Billing: Direct Billing is offered worldwide • Payment Frequency: Annual, semi-annual, quarterly, or monthly

Claims Process • Required Documents: Original copies are not required, just the Diagnosis Form, Claim Form • Average Waiting Period: 15 working days • Reimbursement Method: Claimants can choose the currency in which they wish to be reimbursed • Average Percentage of Claims Disputed: Less than 1%

Conditions of Cover • Pre-Existing Conditions: Cover for pre-existing conditions can be available for clients with 2 or more employees • Other Terms and Exclusions: Chronic and congenital conditions may be covered under certain plan types. Hereditary conditions are generally excluded • Infants and Newborns: Newborns are covered from birth • Age Limits: The maximum joiner age is 65, but if an individual had joined Aetna before then they will be covered with no age limit.

Member Servicing • In Asia Pacific, Aetna has a Call Center with more than 2,000 Employees • 24hr hotline from 8.00am to 20.00pm • Aetna has an administration team and claims team. The administration team is responsible for handling and updating all employee movements, while the claims team is responsible for processing all the hospital and clinical claims. Both teams handle clients’ daily enquiries.

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Appendix

American International Assurance Company (Bermuda) Limited Company Information

Key Features

Telephone (852) 2232-8888 Member Hotline (852) Available Fax (852) 2882-4592 Address 13/F, AIA Tower, 183 Electric Road, North Point, Hong Kong/ 7/F, AIA Plaza, 18 Hysan Avenue, Causeway Bay, Hong Kong/ Suite 1501, Manhattan Place, 23 Wang Tai Road, Kowloon Bay, Kowloon Website www.aia.com.hk/ Email hk.customer@aia.com

Products • Hospitalisation, Major Medical, Outpatient, Dental, Maternity, Overseas Emergency, Emergency Medical Evacuation & Repatriation, ASO Plans, Flexi Plans • AIA also offers health talks, seminars and preventive care services e.g. flu vaccination

Main Distribution Channels • Broker • Agent

Healthcare Network • Hong Kong: Up to 2,400 panel doctors and all private hospitals in HK. • Global: Through an extensive network of 250,000 agents and 20,000 employees across 15 geographical markets, the AIA Group serves over 20 million customers in the region.

Policy Details

Company Profile • Through an extensive network of 250,000 agents and 20,000 employees across 15 geographical markets, the AIA Group serves over 20 million customers in the region.

• Subsidiaries and affiliates located in Asia Pacific jurisdictions include Australia, Brunei, China, Hong Kong, India, Indonesia, Macau, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

Background The AIA Group is a pan-Asian life insurance organisation that has been operating in the Asia Pacific region for more than 90 years. It provides consumers and businesses with products and services for life insurance, retirement planning, accident and health insurance as well as wealth management solutions.

• New Policies: New policy contracts issued within 14 working days • Renewed Policies: Information not available • Renewal Dates: Generally, the group plan will be reviewed at renewal. Mid-year reviews may be available on a case-by-case basis.

• Payment Methods: Premiums to be paid by tele-transfer or cheque • Worldwide Billing: Yes. HKD, MOP and USD. • Payment Frequency: Annual, semi-annual, quarterly, or monthly

Claims Process • Required Documents: The insured member submits a completed claim form with original doctor receipts containing patient name, expenses, diagnosis, date of consultation, doctor signature and referral letter (if necessary) • Average Waiting Period: All claims processed within 7 working days • Reimbursement Method: Information not available • Average Percentage of Claims Disputed: Less than 0.01%

Conditions of Cover • Pre-Existing Conditions: Generally, pre-existing conditions may be waived for a client provided that the latest claim report issued by the current insurer can be submitted for reference, and that these conditions are also covered by the current insurer.

• Other Terms and Exclusions: Chronic, congenital and hereditary conditions are generally not covered. Subject to conditions and exceptions, AIA may allow members to convert their group medical plan to individual medical plan upon their retirement or new employment within a 2 year period • Infants and Newborns: AIA generally cover newborns after 14 days from the date of birth. Congenital defects and pre-existing condition are general exclusions for newborns • Age Limits: The upper age limit is 65 years old. The extension of coverage will be considered in accordance with AIA’s underwriting requirements

Member Servicing • Customer Service Representatives Hotline, Mon - Fri (Closed on public holidays) • Computer System Servicing, Mon - Sat (Closed on public holidays) • Nurseline (Exclusively for Managed Care insured members, a team of registered nurses provide answers to health and medical questions, Mon - Fri (Closed on public holidays) • AIA’s online benefit tools provides access to information including benefit summary, network medical provider list, download manual and forms, claim status inquiries

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Appendix

Asia Insurance Company Limited Company Information

Key Features

Telephone (852) 3606-9933 Member Hotline (852) 3606-7346 Fax (852) 2899-2426 Address 16/F Worldwide House, 19 Des Voeux Road Central, Hong Kong Website www.asiainsurance.hk Email medical@afh.hk

Products • Group Hospitalisation, Outpatient, Life, Accident & Critical Illness Plan, Individual Hospitalisation Plan, Top Up Medical Plan

Main Distribution Channels • Agent • Broker • Bancassurance

Healthcare Network

Company Profile • Founded in 1959, Asia Insurance Company Ltd (AI) is one of Hong Kong’s leading general insurers, with a strong financial foundation, a large distribution network and a quality client base.

• AI has received a financial strength rating of A from Standard & Poor’s. Its annual turnover exceeded HK$ 800mn in 2009 and its total assets stood at HK$4 billion at 31 Dec 2009.

Background Asia Insurance is wholly owned by Asia Financial Holdings Ltd (“AFH”), which is listed on the Hong Kong Stock Exchange with total assets exceeding HK$ 6.6bn at 31 Dec 2009. AFH has other investments in healthcare and personal retirement coverage.

• Hong Kong: Over 1000 panel doctors, 11 hospitals • Global: Agreement with Macau Kiang Wu Hospital under which a patient can check in using their Asia Insurance medical card, and the cost will then be sent directly to Asia Insurance for settlement

Policy Details • New Policies: Around 10 working days • Renewed Policies: Around 10 working days • Renewal Dates: Generally, the group plan will be reviewed at the renewal date • Payment Methods: Cheque or autopay • Worldwide Billing: No • Payment Frequency: Annual, monthly, quarterly, semi-quarterly

Claims Process • Required Documents: Completed claim form to be submitted with the original doctor’s receipt and details of diagnosis • Average Waiting Period: Average of around 15 working days • Reimbursement Method: Cheque autopay • Average Percentage of Claims Disputed: Less than 1%

Conditions of Cover • Pre-Existing Conditions: Not covered for new schemes. For group business where Asia Insurance is taking over from another provider, pre-existing conditions may be covered on a case-by-case basis.

• Other Terms and Exclusions: Congenital conditions are excluded. However, chronic and hereditary conditions may be covered under a tailored package • Infants and Newborns: Newborns are covered after 15 days from the date of birth.

• Age Limits: The upper age limit for group plans is 65, but this may be extended to up to age 100

Member Servicing • Office hour (9:00am to 17:30pm) • Real person hotline service

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Appendix

AXA China Region Insurance Company Limited Company Information

Key Features

Member Hotline (852) 2828-8393 Fax (852) 2598-6502 Address 20/F., AXA Centre, 151 Gloucester Road, Wanchai, Hong Kong Website www.axa.com.hk Email employee.benefits@axa.com.hk

Products

Company Profile

Healthcare Network

• 80 million customers worldwide, with 214,000 employees worldwide • Over one million customers in Hong Kong and Macau • AXA is a leading Group Medical Insurer in Hong Kong and it ranked 3rd in this market based on premium revenues in 2009

• Hong Kong: Health Link Cards are accepted by over 1,200 panel doctors and AXA Care cards are accepted by 12 private hospitals in HK.

Background AXA China Region, a part of AXA Asia Pacific Holdings Limited, is a member of the AXA Group and commenced business in Hong Kong in 1986. As well as financial protection services, AXA is also a provider of a wide range of investment-linked and savings protection plans.

• Hospitalisation, Major Medical, Clinical, Dental, Maternity, Emergency Evacuation & Repatriation, ASO Plans

Main Distribution Channels • Broker • Agent • Salaried Agent • Direct

Policy Administration • New Policies Issuance Turnaround Time: Between 7 to 14 working days depending on level of complexity • Renewed Policies Issuance Turnaround Time: Between 5 to 10 working days depending on level of complexity • Renewal Dates: Generally, group plans will be renewed annually and renewal dates are normally the anniversary date of the original date of policy inception.

Mid-year reviews may be available on a case-by-case basis.

• Payment Methods: Premiums are normally paid by cheque • Payment Frequency: Annual, semi-annual, quarterly, or monthly

Claims Process • Required Documents: The insured member should submits a completed claim form with original doctor receipts containing patient name, expenses, diagnosis, date of consultation, doctor signature and referral letter (if necessary).

• Averaged Processing Turnaround Time: Outpatient claims - around 7 to 10 working days. Inpatient claims - around 15 to 20 working days.

• Reimbursement Method: By autopay or by cheque • Average Percentage of Claims Disputed: Less than 1%

Conditions of Cover • Pre-Existing Conditions: Generally, pre-existing conditions may be waived for a client provided that the latest 9-month claim report issued by the current insurer can be submitted for reference, and that these conditions are also covered by the current insurer.

• Other Terms and Exclusions: Chronic, congenital and hereditary conditions are generally not covered.

• Infants and Newborns: Will be covered with effect from the 14th day after birth.

• Age Limits: The upper insurable age limit is 65. Extension of coverage will be considered in accordance with AXA’s underwriting requirements.

Member Servicing • Members can enquire about their claims transaction record and payment status via AXA’s website.

• Members can enquire about their claims transaction record and payment status via member hotline during office hours. All enquiries are handled by experienced customer service representatives.

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Appendix

Bupa (Asia) Limited Company Information

Key Features

Telephone (852) 2517-5388 Member Hotline (852) 2517-5388 Fax (852) 2548-1848 Address 18/F DCH Commercial Centre, 25 Westlands Road, Quarry Bay, Hong Kong Website www.bupa.com.hk Email indsales@bupa.com.hk (individual member) grpsales@bupa.com.hk (group member)

Products

Company Profile • Bupa has operated in Hong Kong for over 30 years, and is one of the top three medical insurers in the local market.

• Bupa’s share of the medical insurance in HK is around 16% premium revenue.

• As a provident association, Bupa has no shareholders and all profits are reinvested into the company.

• Bupa´s medical network has over 2,400 clinics and health facilities, making it the largest in Hong Kong.

• Bupa is the first insurer to offer lifelong guaranteed renewal of individual health insurance, to ensure policyholders are covered into their old age.

Background Established in 1947, Bupa is an international health and care company with bases on three continents and more than 34 million customers. Bupa provides individual and group health insurance services to over 200,000 individuals and 2,000 companies in Hong Kong.

• Individual and Group Medical insurance, Critical Illness insurance, Civil Servants Medical Insurance

Main Distribution Channels • Agents • Brokers • Tele-sales

Healthcare Network • Hong Kong: Over 2,400 clinics and health facilities in Hong Kong* * 5 Health facilities include Physiotherapy Centre, Diagnostic Centre, Dental Centre, Check up Centre & Chinese Medicine Practitioner Centre • Global: over 8 million members of 115 nationalities in 190 countries. Access to a global network of over 5000 participating hospitals and clinics

Policy Details • New Policies: must be confirmed at least 7 working days prior to the end of month so as to effect the cover on the 1st day of the following month • Renewed Policies: must be confirmed for renewal at least 7 working days before the contract renewal date • Renewal Dates: Normally conducted 2 months prior to the annual renewal.

However, for some larger clients these may start earlier. Mid-year reviews are available depending on client size and requirements.

• Payment Methods: Premiums to be paid by cheque • Worldwide Billing: No • Payment Frequency: Standard packaged medical insurance plan are paid annually, and tailor-made medical insurance plan can be paid annually, quarterly or semi-annually

Claims Process • Required Documents: Completed claim form to be submitted with original doctor receipts, referral letter (if applicable), patient name, diagnosis and doctor’s signature to be received within 90 days after date of treatment.

• Average Waiting Period: 5 to 7 working days for general hospital and clinical claims • Reimbursement Method: By autopay or cheque • Average Percentage of Claims Disputed: Information not available

Conditions of Cover • Pre-Existing Conditions: Bupa does not cover pre-existing conditions for packaged schemes. For tailor-made schemes, Bupa will cover pre-existing conditions if the client company can provide claims data, or has 50 employees or more.

• Other Terms and Exclusions: Chronic, congenital and hereditary conditions are excluded under general exclusions.

• Infants and Newborns: Newborns are covered from 15-days old, with no waiting period and exclusion terms as per normal.

• Age Limits: The upper age limit is below the age of sixty-five for an employee and for the lawful spouse. For any lawful unmarried child, the age limit is between the age of 15 days and 17 years, or up to age 22 provided that such child is a full time student.

Member Servicing • Customer Service hotline: 9.00am to 18.00pm, Mon - Fri • 24 hours IVRS system • Bupa Active, and online service for member to track their claim status anytime and anywhere

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Appendix

Blue Cross (Asia-Pacific) Insurance Limited Company Information

Key Features

Telephone (852) 3608-2888 Member Hotline (852) 3608-2988 Fax (852) 3608-2938 Address 29/F, BEA Tower, Millennium City 5, 418 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong Website www.bluecross.com.hk Email cs@bluecross.com.hk

Products • Hospitalisation, Outpatient, Dental, Major Medical, Maternity, Body Checkup Programme

Main Distribution Channels • Broker • Agent • Bank assurance • Direct

Healthcare Network

Company Profile • Established in 1969, a wholly owned subsidiary of the Bank of East Asia since 1999 • Capital Weekly PRO Choice Award 2009 for Medical & General Insurance • Capital Weekly Service Award 2008 – Medical Insurance

• Hong Kong: over 1,100 medical centres and more than 1,300 general practitioners and specialists

Policy Details • New Policies: Average of 7 working days • Renewed Policies: Average of 7 working days • Renewal Dates: At anniversary • Payment Methods: Payment of premiums by bank transfer or, cheque • Worldwide Billing: Available if the client has a representative office in Hong Kong • Payment Frequency: Annual, semi-annual and quarterly

Background

Claims Process

Blue Cross (Asia-Pacific) Insurance Limited (Blue Cross) is a member of The Bank of East Asia Group. With over 40 years of operational experience in the insurance industry, Blue Cross provides a range of products and services, including medical, travel, and general insurance, to both individual and corporate customers.

• Required Documents: The insured member submits a completed claim form with original doctor receipts containing patient name, expenses, diagnosis, date of consultation, doctor signature and referral letter (if necessary) • Average Waiting Period: Outpatient claims—around 7 working days/ Inpatient claims - around 10 working days • Reimbursement Method: Autopay & cheque

Conditions of Cover • Pre-Existing Conditions: Disabilities which presented signs or symptoms of which the Insured was aware or should reasonably have been aware or for which the Insured received medical or surgical care or treatment within 90 days immediately preceding the effective date of coverage applicable to such Insured, unless the Insured has been covered under the Policy for not less than 365 days.

• Other Terms and Exclusions: Maternity, birth control, routine checkup, dental expenses, self-inflicted injuries, HIV related disabilities, venereal diseases, mental and psychic disorders, congenital and pre-existing conditions, etc. are generally not covered • Infants and Newborns: Newborns are covered after 15 days from the date of birth • Age Limits: Anyone aged between 15 days and 65 years old is eligible to enroll.

Members can renew their coverage up to age 75.

Member Servicing • Dedicated website (Blue Cross Super Care) for group medical members: www.bluecross.com.hk/supercare • Blue Cross Customer Service Hotline: 3608-2988, Monday to Friday: 9:00 a.m. to 18:30 p.m., Saturday: 9:00am to 1:00pm

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Appendix

CIGNA International Expatriate Benefits Company Information

Key Features

Telephone (852) 2233-4474 Member Hotline (852) 8205-8205 Fax (852) 2886-3722 Address 25/F, Sunning Plaza, 10 Hysan Avenue, Causeway Bay, Hong Kong Website www.cignaexpats.com Email enquiryhk@cigna.com

Products • Medical, Dental, Long-Term Disability, Life Cover, Accidental Death & Dismemberment, Vision, Employee Assistance, Emergency Evacuation

Main Distribution Channels • Broker • Direct

Healthcare Network

Company Profile • Started in 1976, CIGNA International is a leader in the development of medical insurance and other employee benefits designed specifically for expatriates— people who live and work outside their home countries.

• 27 locations around the world, and provides employee benefits to expatriates in more than 200 locations.

• Currently has around 15% of the market for international healthcare plans • CIGNA’s customers include 42% of the Fortune 100 companies

Background The CIGNA companies maintain networks of sales and service offices in major markets worldwide, maintaining a staff of some 28,000 worldwide. CIGNA subsidiaries offer programmes to approximately 47 million people around the globe. CIGNA and its subsidiaries constitute one of the largest investor-owned health service organisations in the US.

• Hong Kong: Access in Hong Kong to QHMS medical network of 42 QHMS medical centres & 600 affiliates • Global: In the US, over 650,000 physicians & hospitals & 107,000 dental access points. Around 90,000 internationally based providers

Policy Details • New Policies: Around 10 working days • Renewed Policies: Around 10 working days • Renewal Dates: Generally, the group plan will be reviewed at renewal • Payment Methods: Premiums to be paid by bank transfer or cheque • Worldwide Billing: Yes • Payment Frequency: Annually, quarterly, or monthly

Claims Process • Required Documents: The insured member submits a completed claim form with doctor receipts containing patient name, expenses, diagnosis, date of consultation, and referral letter (if necessary) • Original Documentation: Not required • Average Waiting Period: Around 10 working days • Reimbursement Method: Bank transfer or cheque • Average Percentage of Claims Disputed: Less than 2%

Conditions of Cover • Pre-Existing Conditions: Covered for clients with 2-10 employees as long as these are covered by their previous provider with similar benefits. 2-10 employees with no existing cover are excluded for 1 year. Clients with 11 or more employees are covered for pre-existing conditions irregardless of current coverage.

• Other Terms and Exclusions: Chronic, congenital and hereditary conditions are covered in full.

• Infants and Newborns: CIGNA cover newborns from birth and in full.

• Age Limits: No upper age limit for employees or spouse. Up to and including age 24 for dependant children

Member Servicing • 3 call centres: Hong Kong, UK and USA • 24hr hotline

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Appendix

HSBC Insurance (Asia-Pacific) Holdings Limited Company Information

Key Features

Telephone (852) 2233-3131 Member Hotline (852) 2288-6993 Fax (852) 2288-7300 Address Head Office, HSBC Insurance (Asia-Pacific) Holdings Limited, 18/F, Tower 1, HSBC Centre, 1 Sham Mong Road, Kowloon, Hong Kong Website www.insurance.asiapacific. hsbc.com Email medical@afh.hk

Products • Hospitalisation and Outpatient Insurance, Medical Credit Card, Dental Cover

Main Distribution Channels • Broker • Direct

Healthcare Network • Hong Kong: A wide choice of doctors and hospitals in more than 200 locations • Global: Information not available

Policy Details

Company Profile • Total assets stood at HK$165 billion as of 31 December 2008.

• Globally, HSBC Insurance contributed US$1.2 billion or 16 % of • Group profit as of 30 June 2009, of which Asia Pacific Region’s share was US$0.5 billion.

• Over 2,000 staff providing professional support to its business and customers as of 30 June 2009.

Background HSBC Insurance (Asia-Pacific) Holdings Limited is a wholly owned subsidiary of the HSBC Group. It consists of three insurance underwriters: HSBC Insurance (Asia) Limited, HSBC Life (International) Limited, and HSBC Insurance (Singapore) Pte Limited. It also owns a 50% shareholding in Hang Seng Life Limited, a joint venture with Hang Seng Bank Limited.

• New Policies: • Renewed Policies: • Renewal Dates: • Payment Methods: • Worldwide Billing: • Payment Frequency:

Claims Process • Required Documents: • Average Waiting Period: As soon as possible for general hospital and clinical claims upon receiving the claim form and all required documents • Reimbursement Method: • Average Percentage of Claims Disputed:

Conditions of Cover • Pre-Existing Conditions: • Other Terms and Exclusions: • Infants and Newborns: • Age Limits:

Member Servicing • Phone or Fax: Mon-Fri, 8.45am—17.35pm • Online Claims and Assistance Services: 24 hours a day, 7 days a week

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Appendix

Manulife (International) Limited Company Information

Key Features

Telephone (852) 2108-1388 Member Hotline (852) 2108-1388 Fax (852) 2234-5371 Address 36/F, Manulife Tower, 169 Electric Road, North Point, Hong Kong Website www.manulife.com.hk Email service_hk@manulife.com

Products

Company Profile

• Manulife Medical Cards can cover around 1,200 panel doctors and 12 private hospitals in HK

• Provides employee benefit services to 1/3 of the Hong Kong workforce, serving over 880,000 employees • Hong Kong, has the largest number of Group Medical policies with employers and around 10% of the Group Medical Insurance market share based on premium revenues* * According to the 2008 HKFI Statistics Report on the medical Insurance Business

Policy Details

Background Manulife’s Employee Benefits services— A Brand Built Upon Service Excellence Manulife (International) Limited is a member of the Manulife Financial group of companies, one of the world’s largest and most strongly rated listed life insurance organisations. Manulife has been in Hong Kong for over 110 years. Our experience in managing pension schemes can be traced back to 1936.

• Hospital, Supplementary Major Medical, Top up, Clinical, Maternity, Dental

Main Distribution Channels • Agent • Broker • Direct

Healthcare Network

• New Policies: Around 10 working days to set up a new policy • Renewed Policies: Around 10 working days to renew a policy • Renewal Dates: In general, 3 months upon renewal is our standard practice.

For jumbo clients, we can provide quarterly or semi-annual reviews to the group plans. MIL could provide mid-year benefit changes for clients, but for better/easy communication with our client, it is recommended to do it upon the sign-up anniversary.

• Payment Methods: Cheque • Worldwide Billing: N/A • Payment Frequency: Every 2 years, annually, quarterly, semi-annually or monthly

Claims Process • Required Documents: Basic documents for the claim include completed claims, original official receipt, patient’s name on receipt must be matched with member’s record, date of service, provider/clinic chop and doctor’s name and signature and breakdown of charges of all charged items.

• Average Waiting Period: Within 8 working days • Reimbursement Method: By cheque or bank transfer • Average Percentage of Claims Disputed: Estimate to have around 0.02% of claims appeal each month

Conditions of Cover • Pre-Existing Conditions: No benefit shall be payable to any injuries or sickness occurring prior to the insured’s benefit becomes effective unless they are not received any medical treatment or recommendation/advice from medical services provider on such pre-existing condition over a period of three consecutive months or such benefit is in respect of medical treatment received or recommended one year after their benefit become effective.

• Other Terms and Exclusions: Routine physical examinations, congenital, dental care, consmetic surgery, pregnancy, vaccination, suicide, AIDs etc.

• Infants and Newborns: Childs are covered after 15 days from the date of birth.

• Age Limits: For life, ADD & TPD and medical, Issue age - Employee/ spouse: 16 -64 & Child : Day 15 to age 24. For life and medical, Termination ageEmployee: 65 or 70, Spouse : 65 & Child : 25, age 65 for ADD & TPD

Member Servicing • Specialist call centre dealing with employee benefits employers and employees • Extensive e-GLH online services for employers and employees to manage billing, claims, enquiries • Hotline available: Mon—Fri 9:00am to 18:00pm • Onsite seminars available for employees • Regular value-added benefits offers

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Appendix

MassMutual Asia Ltd Company Information

Key Features

Telephone (852) 2919-9111 Member Hotline (852) 2919-9111 Fax (852) 2521-8039 Address 12/F, MassMutual Tower, 38 Gloucester Road, Hong Kong Website www.massmutualasia.com Email http://www.massmutualasia.com/ en/top/others/contact.html

Products • Hospitalization, Outpatient, Top-up Major Medical, Dental, Maternity, Preventive Programmes, Medical Referral Programmes

Main Distribution Channels • Broker • Agent • Direct

Healthcare Network

Company Profile • Consistently achieved double-digit average annual growth in new individual business over the past several years • In 2008, total premium income exceeded HK$2.9 billion.

Background MassMutual Asia Ltd., MassMutual Asia, is a member of the US-based MassMutual Financial Group,and the flagship company for the group’s insurance and wealth management businesses in the Asian region. MassMutual Asia Ltd has its headquarters in Hong Kong, and operates a branch office in Macau. MassMutual Asia also operates several subsidiaries in Hong Kong, including MassMutual Asia Investors Ltd., which provides an array of wealth-management services, MassMutual Trustees Ltd., which focuses on MPF, and MassMutual Insurance Consultants Ltd., which handles general insurance. The MassMutual network in Asia also includes “MassMutual Mercuries Life Insurance Co., Ltd.” in Taiwan and “MassMutual Life Insurance Company” in Japan.

• Hong Kong: Over 2,500 of panel doctors and hospitals in HK • Global: Access to worldwide cover through Inter Partner Assistance Hong Kong Ltd, IPA.

Policy Details • New Policies: Information not available • Renewed Policies: Information not available • Renewal Dates: Generally, the group plan will be reviewed at renewal. Mid-year reviews may be considered • Payment Methods: Premiums to be paid by cheque • Worldwide Billing: No • Payment Frequency: Annual premium terms, loading charges will be applied for quarterly and monthly premium payments.

Claims Process • Required Documents: Completed claim form to be submitted with the original doctor’s receipt with the diagnosis ,date of consultation, amount billed, signature and stamp • Average Waiting Period: Information not available • Reimbursement Method: Information not available • Average Percentage of Claims Disputed: Information not available

Conditions of Cover • Pre-Existing Conditions: Covered for clients with 10 or more employees as long as these are covered by their previous provider with similar benefits • Other Terms and Exclusions: Chronic, congenital and hereditary conditions are generally not covered.

• Infants and Newborns: Newborns are covered after 14 days from the date of birth.

• Age Limits: Maximum benefit entry age at 64 and benefits termination age at 65. Unmarried children are covered as dependants up to age 19, or 24 if in full-time education

Member Servicing • Consultants are on call to provide services to customers 7 days a week

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Appendix

The Prudential Assurance Company Limited Company Information

Key Features

Telephone (852) 3656-8300 Member Hotline (852) 3656-8300 Fax (852) 2977-1233 Address 23/F One Exchange Square, Central, Hong Kong Website www.prudential.com.hk Email service@prudential.com.hk

Products • Group Medical Plan, Individual Medical Plan (Hospital / Clinical), Body Checkup Plan, Top Up Medical Plan

Main Distribution Channels • Agent • Bank assurance

Healthcare Network

Company Profile • Insurance and asset management operations in 13 markets covering China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand, the United Arab Emirates and Vietnam.

• Has a network of 400,000 agents serving more than 11 million customers across the region.

• Medical Insurance market share in HK is around 3.6% based on gross premium (2008)

Background Prudential plc was established in 1848, and is an international retail financial services and insurance company with significant operations in Asia, the US and the UK. Prudential employs over 27,000 people worldwide, and is listed on both the London and New York stock exchanges.

• Hong Kong: Over 500 panel doctors • Global: Information not available

Policy Details • New Policies: Timescales tailored to client requirement • Renewed Policies: One month before renewal date • Renewal Dates: Generally, the group plan will be reviewed at the renewal date • Payment Methods: Premiums can be paid by cheque, bank transfer, or credit card autopay • Worldwide Billing: No • Payment Frequency: Annual, monthly

Claims Process • Required Documents: Completed claim form to be submitted with the original doctor’s signature • Average Waiting Period: Within 2 weeks after all required documents are submitted • Reimbursement Method: Information not available • Average Percentage of Claims Disputed: Information not available

Conditions of Cover • Pre-Existing Conditions: Generally not covered. But if the pre-existing conditions are over 5 years old, they may be accepted subject to individual review • Other Terms and Exclusions: Chronic, congenital and hereditary conditions are generally not covered.

• Infants and Newborns: Newborns are covered after 15 days from the date of birth.

• Age Limits: The upper age limit for group plans is 65 for both members and members’ dependants.

Member Servicing • Office hours: 9:00am—17:30pm • Real person hotline service

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Appendix

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