It is surprising that expatriates rely on Facebook groups to get advice on insurance (medical, home and motorbike mainly)… and it extends to banking and financial products.
Read on Facebook: “Dear FB friends, can you recommend the best health insurer… brokers and insurers, please do not bother answering.” Usually, people count on the 1st 2 pages of the Google search to make a decision and buy professional insurance online.
When crowdsourcing does not work
Crowdsourcing, the action of asking advice and recommendation to unknown people on the Net, is interesting when you want to have an opinion whereby your finances, health and future are not at stake. It is the equivalent of saving on a Market survey, it is smart.
Medical insurance is a financial product:
- Now imagine you need lifetime kidney dialysis, 3 times/ week/ 52 weeks: Thailand $12,000 and Singapore $34,000/ year, for a lifetime. A rogue insurer will want to avoid such a ‘client’ by denying your claim. Who in the FB group has been reading the fine prints and the list of exclusions of the insurer of your choice?
- The 20/ 80 rules: most expatriates stay less than 4 years in Vietnam. A big insurance problem for any expat, involving unfair (or fair) claims denial, may happen every 5 to 10 years, if it ever happens. The probability of having good advice in the worst-case scenario is very low 1/ 10… if that 1 guy is still in Vietnam and on the Net answering your post.
- What if you have a 10 or 20/ 80 in your favour answering.
Why should professional and insurance advice not be sought and trusted on social networks?
- Insurers make money by asking you to pay more and refund you less when you have a claim. The difference between the premium you pay and the claims they refund to you is their profit. Therefore, insurers are more profitable when they pay less to you than you paid to them.
- The 20/ 80 rule: the job of most insurers is to pay claims therefore 80% at least of reviews should be favorable to any insurer. If they had 80% of bad reviews, they would be bankrupt a long time ago.
- The 20% remaining are rare, arguably leading to legal action and expensive risks to pay for if the insured is denied to pay. These rare occurrences are the problem that long-term professionals -brokers and lawyers- have faced sometimes with litigation to defend clients to get their claims refunded. Unfortunately, those unfortunate situations most expats on FB will never encounter.
Let’s review professionally any health insurance product vs Crowdsourcing:
“I know insurance is all the same everywhere in the world” or “It’s only when the tide recedes that we can see who has been bathing naked.” Most expats forums have been in petty cash, ‘simple illness and refunds, therefore their testimonials will be on a few hundred USD of claims. How many on FB groups have been experiencing from $50 to $100,000 claims refund over 3 or 4 years?
Would you be “Pennywise, Pounds foolish”, in other words, how far will your insurer go to refund all due costs you are insured for. Should you have a serious, long and expensive illness like cancer whereby treatment spans over a few years. Many long-term insurance consultants have been witnessing how each insurer deals with an extreme payout for chronic conditions.
80/ 20 RULES: 80% of claims should be smooth as small bills, what about the 20% big money at stake? Most people will read the benefit table and declare “well that is fine, exactly what I am looking for”, you are in the 80% zone. Health benefits brochures are made just for that.
- Unfortunately, the risk (some call it the devil) hides in the details of the fine prints and exclusions in the Terms and Conditions booklet. Those additional lines scripted by the insurers, usually in a jargon FB fans do not understand, are made to avoid big spending when there is no big demand from the market, from you. That means any 20% illness or accident that the insurer feels ‘inconvenient’ to pay, will be on the list of exclusions. The list of exclusions is revised every year. How many social media members have read those lines, and understood?
- This is precisely what any insurance advisor is paid to do, to better advise their clients on the good and bad aspects of each insurance product.
How long on average do FB group expatriates stay in Vietnam? The answer is 3.7 years…
- How long do you purchase and health insurance to protect your family and to access the best hospitals -instead of the public local hospital- for? But more importantly, how often you may have big changes in your circumstances, that is very personal to you, that any advice by a social surfer will suit your needs. Girlfriend to add, wife, newborn cover, change of country, job, salary, home cover etc…
- Other insurances: Do you need all this level of coverage? 3rd party liability Eur 2Mio in case you injure, kill or disable someone? How much should you buy property insurance value to reimburse the VN landlord or the building should the apartment you rent burns?
- Any insurance consultant will provide you the product that will suit your needs as long as you are resident in Vietnam and sometimes the various protections for your family wherever your lifestyle takes you.
“Price is what you pay, value is what you get” or “you get what you pay for” – Warren Buffett, Investment professional.
What most expatriates ignore is that in SE Asia, health insurance is new with no client protection in place yet by the regulator. In short, there is no law for an insurer to guarantee the renewal of your plan under the same terms and pricing. They may as well stop any relationship with a “bad client” when your claim ratio is more than the premium you paid… regardless of the illness, the insurer is paying the treatment for. Thus cutting their relationship, is equivalent to cutting their loss. Now you are out-of-pocket for your pre-existing illness hospitalisation costs.
- For Asian people, the important thing is that insurance is being used to pay for the family’s daily usage of a doctor or a hospital. They will be happy with small costs being paid and hope -or sometimes believe- big health problems will not happen to them. Also, they know -and accept the fact- that an insurer is like any business, is entitled to make a profit, whatever it takes. Little do they know that health, life and disability insurance is not a normal business and insurers should be in for the long-term, and this is what has been regulated in Western developed countries long ago.
- Professionals in insurance understand the saying “if it is too good to be true”…it is probably a scam, full of exclusions or ‘mission impossible’ procedure to claim back your expenses.
Insurance administration: quick and efficient bill settlement
In the long-term, we are all dead, John Maynard Keynes. The Nobel prize economist meant there are situations where quick processing and administration have immediate and sometimes life-saving value. There is no better business than health insurance where the hindsight of a professional advisor can help you select the life-saver insurer. Here are a few case studies in Vietnam and Asia.
Who in a FB group has been in this situation where an efficient insurer’s administration is crucial? To be answered affirmatively that there will be no problem?
- You need an urgent air evacuation to Thailand, that is organized by International SOS and you are waiting for a LOG Letter Of Guarantee of Payment for ISOS to let you board the medicalized private plane.
- Due to a motor accident, you urgently need to be admitted to an International hospital at expected treatment costs $7,500 or you can afford the $1000 cost of the local government hospital for surgery.
- More recently, you need a Covid insurance certificate to get a visa or board a plane at embarkation.
All those are daily cases for an insurance broker, knowledge with hindsight. “Forewarned is forearmed” the saying goes.
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More on 5 professional criteria to select the right insurance product use. Contact us if you need advice or review your insurance.