Review promised on insurance premiums
Updated: 2011-12-23 08:38
By Andrea Deng(HK Edition)
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Progress is reported in ongoing talks about prohibitive premiums assessed on insurance policies for laborers.
The issue has afflicted several trades charging what appear exorbitant premiums. The insurance industry on the other hand claims it is already burdened by huge deficits as a result of labor insurance payouts.
The Hong Kong Federation of Insurers (HKFI) promised to standardize the No Claim Bonus and to create greater transparency during Thursday's joint meeting between various trades and the government.
The HKFI reiterated that it will review premiums in general, with independent actuaries evaluating the figures and setting premiums for different industries.
The insurance federation also pledged to follow up urgent cases within three days.
A dozen recycling and cleaning service companies face imminent expiration of their labor insurance plans. The companies are virtually forced to renew, since they are not allowed to carry on business without insurance under the Employees' Compensation Ordinance. None of these companies has renewed its insurance, however.
Premiums have skyrocketed for 2012 at most cleaning and recycling companies, in some cases, 10 times higher. There are extreme cases in which premiums shot up from HK$30,000 a year to HK$600,000. An increase of that magnitude is beyond the means of small and medium sized companies, according to Hong Kong Federation of Trade Unions lawmaker Wong Kwok-hing.
One urgent case has already received a response. The HKFI has decreased the yearly premium assessed for a recycling company. The premium was lowered from around HK$210,000 to HK$120,000, said Lau Yiu-shing, vice-president of the Hong Kong Recycle Materials and Re-production Business General Association.
But Lau said even at HK$120,000, the price is still too high. The recycling company, which has only five employees, was charged about HK$18,000 in 2011. The company did not accept the revised charge.
"There is still room to bargain," Lau said, referring to the HKFI, which is responsible for the negotiations.
The sudden jump in premiums, however, is not without cause.
Labor policies created losses to insurance companies in the neighborhood of HK$8 billion in the last few years. The result was, higher premiums. In the transportation industry alone, insurance companies were seeing a yearly deficit of HK$100 million, on average, according to the Office of the Commissioner of Insurance.
The major reason, the insurance insiders said, was the high insurance fees paid as a result of motor vehicle mishaps.
Even worse, a number of irresponsible companies filed false information to the insurance companies. Inaccurate filings included the number of employees, salaries and the types of work carried out by the employees.
Lau rejected that accusation, calling it a one-size-fit-all theory that is not fair to the majority of companies that operate honestly. He said that most of the 380-odds recycling companies in his association are small, with only three to five employees. He said there is not much room to cheat.
andrea@chinadailyhk.com
China Daily
(HK Edition 12/23/2011 page1)