What happens when your insurer closes shop

Peace of mind is powerful phrase. A lot of what we work for every day, week, and year is to gain peace of mind in one sense or another. The insurance industry is built on the idea that, even during the times in which we feel that we, our families, our businesses, and our physical and financial wellbeing feel the most stable, there are still events in life that can occur unexpectedly, and show that we should not be so quick to feel that we truly have peace of mind. Insurers provide a backup plan that can greatly improve the outcomes for policyholders following these types of potentially life changing events.

Say what you want about whether or not a person can ever truly have peace of mind, but having a comprehensive insurance plan from an insurance company that you trust can make a difference in how much day-to-day anxiety can be felt when it comes to risk. What happens when your insurer closes in the place you live, though? If your insurer today were to exit Hong Kong tomorrow, what would the effects be? Pacific Prime Hong Kong answers these questions in the article below. Read on to find out more.

When a Hong Kong insurer closes

Pacific Prime is typically thought of as a broker of international health insurance in Hong Kong and other countries around the world. It’s noteworthy, then, to mention that, while users of our website will typically be most interested in the prospect of being left behind by their health insurance provider, it should also be taken into account that other types of insurances can be lost too, including business insurance, life insurance, property insurance, reinsurance, and many more.

An insurer dropping out of this or that market is actually more common than you might think, as there are also quite a few reasons that insurance companies cite for doing so. (More on this in the next section.) What’s more, as insurance companies are oftentimes involved in more aspects of the global financial sector than just insurance, there are a number of different types of business that you may see insurance companies pull out of from time to time.

Why insurers leave the market

When an insurer closes up shop in one location, many people may assume that it is going out of business, or has poor leadership or business practices. While this could, indeed, be the case, it’s important not to jump to any conclusions. There are many different reasons why an insurer closes in a place, and just because an insurance provider won’t be present in a given market does not mean one should assume that it is going out of business, or unstable in any way.

Here are some reasons that an insurance company might want to stop doing business in a particular market:

• Government intervention – It’s not always an insurance company’s decision to shut down in a territory. Sometimes the government makes that decision on a company’s behalf as the result of a new law, or a lack of compliance with an already established law. This reason was recently exemplified in the Philippines, where a government regulatory body shut down five non-life insurance companies for failure to meet that nation’s capital requirements set forth by its insurance code.
  
• Lack of profits – While we mentioned before that bad business practices are not always the reason an insurer closes, sometimes they actually are. Companies that fail to provide a competitive value proposition to potential and current clients may find themselves lagging behind the competition in Hong Kong, and if this means their profit margins are too slim, or even non-existent, a hasty shutdown here can be the result.
• Changes in leadership/strategy – Since the start of the 21st century, we have seen companies from all walks of business get bought, sold, merged with, acquired, and taken over. The insurance industry is certainly no stranger from these kinds of transactions, as relatively small, yet profitable local and regional insurance providers are frequently being purchased by large, publicly traded multinational insurers looking to break into new markets. The resulting entity is then governed by elite business people that make whatever strategic decisions they believe will best serve shareholders.
  
• New competition – One thing that is always changing in the world of business is the face of the competition. Upstart companies are always launching and trying not only to fill the space that your insurer may be in, but also trying to disrupt the entire industry in a way that can have major impacts on the bottom lines of established companies over time. If an insurer isn’t quick enough to adapt to such changes in the highly competitive Hong Kong insurance market, they may decide that an exit is a good idea.

The above list is by no means comprehensive. Insurance policyholders in Hong Kong would do well to keep tabs on their insurance providers so that they can be aware of any potential instability to their business in the city.

What happens when my insurer closes?

If you found out tomorrow that your health insurance company will not be renewing your policy with them because they are leaving the country in which you are insured entirely, this could be cause for serious concern. After all, if you were not to find another option, you may simply end up without any insurance coverage, and any new plan you get may not cover your pre-existing conditions, right?

In fact, this is a possibility, but it’s not the only scenario that can play out if your insurer closes in Hong Kong. Let’s look at some of the more likely situations that may occur:

• The insurer’s portfolio gets picked up by another company – In many cases, such as when the insurer Zurich Life sold their Singapore clients to new kid on the block Singapore Life at the end of 2017, a departing insurer will find another local insurance provider to pick up their portfolio of clients. By doing so, the departing insurer acts in good faith to attempt to preserve their existing clientele’s insurance plans and coverage.While this is a relatively positive outcome for many, it may not be ideal. This is because the new insurance provider is likely to only offer their existing plan offerings at renewal time, rather than continue the plan as it had existing with the former insurance provider. After all, the plan that the previous insurer sold may not have been effectively profitable, which may have been why the company had to depart in the first place.A big benefit to keep in mind about this type of situation is that the new insurer may still uphold terms, discounts, and benefits included within the previous policy.
  
• You have a mobile plan, so you won’t lose coverage – Some insurance policies, such as the international health insurance policies that Pacific Prime specializes in, come with global mobility. This means that, even if you have to move away from your home country, the plan will continue to provide coverage. Policyholders will find that this type of feature is most commonly found on plans that provide worldwide coverage. With these plans, no matter where you are, you are covered, so the place you live does not actually hold much bearing on the terms of the policy.
• You lose coverage – Sometimes a company just has to leave, and does not have the means, motivation, or time to find a suitable replacement insurer for their existing customers, thereby effectively leaving them high and dry, so to speak. As jarring as it may be to find out that you have no insurance coverage one day, it may be even more so when you sign on with your next insurance provider, especially where health insurance is involved. This is because any medical conditions that would have developed since the start of your previous insurance policy will likely not be covered by a brand new plan.

Contact Pacific Prime Hong Kong

If the information above has you pondering the proposition of your insurance provider(s) leaving the Hong Kong insurance market, you may feel like you are at a loss to avoid such an event occurring, and wondering if there’s any way to foresee a coming insurer exit before it happens. Fortunately, the team at Pacific Prime Hong Kong is available to help!

Contact us today and talk to a helpful and knowledgeable insurance professional that can answer any questions on the Hong Kong insurance market or the status of your insurance provider that you may have. By examining the data available to us, we can provide insights that virtually nobody else can, or will, offer. Get insider-quality information, as well as free plan comparisons and price quotes, from Pacific Prime Hong Kong today!