The renewal letter contains a single number – the index – but three very different factors work behind it. Whoever can untangle them can negotiate them. (When and how to act is covered in the decision article – this is the under-the-bonnet part.)
Factor 1: medical inflation
Private healthcare prices typically outpace general inflation: physician wages, equipment, clinical capacity – all rising items. This is the index’s „objective core": unavoidable in full, but its size can be benchmarked against market references – if you let us know before the renewal date, we prepare this comparison.
Factor 2: the loss ratio
The insurer also looks at how much the portfolio „used": the ratio of premiums paid to services paid out. High utilisation pushes the index up – that is the system’s logic. An important nuance: high usage is not bad news but proof the benefit works; the answer then is not necessarily accepting the increase but fine-tuning the package structure (rearranging limits and modules).
Factor 3: commercial policy
And some of it is neither inflation nor loss ratio: portfolio-level pricing decisions, market positioning. This is the negotiable band – where it truly matters whether someone behind the client also sees the other eight insurers’ pricing moves.
What to query in the index letter
- How much is explained by our loss ratio? (Portfolio statistics can be requested.)
- What is the insurer’s general market index this year – where does ours stand against it?
- What package modification would hold the current premium level?
For our clients we ask these three questions – renewal becomes a process, not a letter, ending either in a fair index or a better package.
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