South Africa-based i3 Actuaries and Consultants hired by Insurance Regulatory Authority (IRA) over a year ago to guide in the development of medical insurance framework says insurers currently charge old people up to 600 percent.
The consultant says the difference in premiums — mainly on account that old people are more prone to sickness and, therefore, spend more on health — is making many senior citizens drop off.
Senior citizens’ medical premiums will be capped at a maximum of 200 percent higher than what younger customers pay if the regulator adopts proposals aimed at sustaining more people in health cover.
South Africa-based i3 Actuaries and Consultants hired by Insurance Regulatory Authority (IRA) over a year ago to guide in the development of medical insurance framework says insurers currently charge old people up to 600 percent more than young customers.
The consultant says the difference in premiums — mainly on account that old people are more prone to sickness and, therefore, spend more on health — is making many senior citizens drop off from medical insurance.
“To allow for cross-subsidisation between younger and older lives it is proposed that a maximum difference between the highest and lowest premium rates between lives on the same product should be introduced,” says the consultant in a proposal to IRA.
“The main aim of this regulation is to prohibit exorbitantly high premium increases for older individuals such that they are forced to lapse medical insurance coverage.”
IRA has now subjected the draft report to public review in what promises to pose a delicate balancing act between sustaining more old people in insurance covers and shielding underwriters from losses.
The consultant says the cap is expected to prompt insurers to create products with more affordable premiums for older age individuals instead of just pricing them highly.
“If insurers are allowed to price these individuals out, it will be unfair for individuals to contribute throughout their life only to be priced out of affording insurance when they reach the age when they need it most,” says the report.
Other recommendations in the draft report include publishing insurance rates per company to discourage price undercutting and capping the period between paying the first premium and starting to enjoy the cover at not more than three months.
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