Premium Levy
When purchasing health insurance, you may notice an extra charge on top of your premium called a premium levy. For expats, especially in regions like Singapore or Hong Kong, understanding this fee helps avoid confusion when reviewing your insurance invoices.
What Is a Premium Levy?
A premium levy is a mandatory government fee applied to insurance premiums. It is collected by insurers on behalf of regulators or industry authorities to fund insurance protection schemes and strengthen consumer safeguards.
Why It Exists
Consumer Protection: In some countries, levies contribute to compensation schemes that protect policyholders if an insurer becomes insolvent.
Regulatory Oversight: Levies fund the administration and monitoring of the insurance industry.
Market Stability: They ensure there are reserves to cover systemic risks, protecting both insurers and customers.
Example by Region
Hong Kong: The Insurance Authority imposes a premium levy on all insurance policies, phased in gradually and capped at a small amount per policy.
Singapore: Instead of a levy, insurers contribute directly to the Policy Owners’ Protection (PPF) Scheme, which safeguards policyholders.
Other Countries: Some regulators charge administrative levies or taxes, which appear as separate line items on invoices.
How It Affects Expats
Small Additional Cost: The levy is usually a tiny fraction of the premium (e.g., less than 1%), but it will appear separately on your bill.
Non-Negotiable: Unlike premiums, you cannot reduce or remove the levy—it is mandated by law.
Transparency: Insurers must clearly display the levy so you understand the breakdown of your payment.
Tips for Expats
Check Invoices Carefully: Ensure the levy is correctly calculated and itemized.
Ask Your Broker: If you’re unsure why you’re being charged, your broker can explain the applicable rules in your host country.
Plan for It: Factor the levy into your total cost of coverage when comparing policies.
A premium levy is not an insurer’s fee but a regulatory requirement designed to protect policyholders and maintain market stability. For expats, it’s a minor addition to your premium—but an important one that supports the long-term security of the insurance system.
