There is a rising chorus questioning the pricing and claiming mechanism of the insurance companies. People may think that insurance companies only want clients who seldom claim and by rejecting claim requests to achieve a bigger return.

Insurance companies are indeed operating a business with the major income stemming from the management of the fund pool. Actually, Insurance premium hardly delivers significant income. Moreover insurance companies adhere religiously to the policy terms in handling policy applications and claims, involving a thorough process and professionals like underwriters, claim professionals, surveyors. It is because insurance companies are compelled to control their pure risks in light of serious abuse, price competition, and inflation in health service.

In fact, the claim ratio of medical insurance is more than 100% and the amount of claim paid is more than the premium. Thus, in order to balance the interests of claimants and the healthy policyholders, insurance companies have to cautiously assess the claims and adjust the premium. In other words, the aforementioned issued pave the way to the increase of insurance premium and in turn affecting the interests of clients

Mechanisms of different types of insurance vary. Jumbo hospital expenses insurance is a typical example. New medical technologies and drugs are available for clients at high costs that are covered the jumbo medical insurance. Cost containment is challenging, as there is no fixed price for the said. In face of competition, insurance companies can merely maintain a competitive low insurance premium to attract and retain customers and introduce a strict and once-and-for-all underwriting process. Motor insurance has a different mechanism and involves more than a single underwriting. After claims, there may be a claim loading. In contrast, there may be up to 60% discount given no claim.

All in all, people should be advised that insurance is not meant for claims but protection and that trusted financial planners can deal with individual situation.