August 24, 2004, Hong Kong – Most people in Hong Kong will be forced to dip into their hard-earned savings or call on the financial support of their families in the event of a serious illness or accident, a new annual “Life Matters” survey has revealed.

The on-going survey evaluates attitudes to insurance and risk, and was commissioned by American International Assurance Company, Limited (AIA). It shows that in the absence of critical illness, medical or accident insurance cover, many people in Hong Kong would face financial difficulties sooner or later in the unfortunate event of serious illness or accident.

Findings show that 20 per cent of the respondents in Hong Kong would face financial difficulty in just three months or less. Over 50 per cent said they could manage for a maximum of 12 months before facing acute financial difficulties. Only 30 per cent said they would be able to manage for more than two years with other sources of financial support. Over 50 per cent would be reliant on dipping into personal savings and investments, or depend on family for support.

In addition to Hong Kong, the survey was also conducted in Malaysia, Singapore and Thailand. Findings show that a similar phenomenon is found across Southeast Asia, with one-in-five people facing serious difficulties within just three months if they were forced to stop work through illness or an accident.

“The survey clearly reveals the enormous risk that people unwittingly face without taking the precautions of adequate insurance cover,” said Mr. Jacky Chan, Vice President and Assistant General Manager of AIA.

“This financial burden only takes into account loss of income. People also ignore the financial impact on individuals and their families of the potentially high costs of expensive medical treatment, the longer-term implications of respite after-care and the consequences of permanent disability.

“At a private hospital, surgical treatment of breast cancer would typically cost in the region of HK$197,000. On-going medical care expenses over the next two years could further cost in the range of HK$50,000. The surgical treatment of heart disease, such as angina, could lead to private medical costs of upwards of HK$140,000. Subsequent medical treatment over the next two years could easily amount to a further HK$10,000.

“This is on top of the serious financial implications that people have already clearly raised with just the potential loss of their work income. This survey clearly exposes the alarming financial shortfall many people face as a consequence of inadequate insurance protection.”

Not every person in Hong Kong has insurance cover. Industry data show that take-up of insurance is relatively low. When insurance premiums are expressed as a percentage of Gross Domestic Product for 2002**, the ratio for Hong Kong is 6.65 per cent compared with that of the UK (14.75 per cent) and the United States (9.95 per cent).

The AIA ‘Life Matters’ survey is being conducted by research firm TNS. Data is collected via telephone interviews from a representative random sample of 500 people in each Hong Kong, Malaysia, Singapore and Thailand. All the respondents from Hong Kong were aged between 25 years and 59 years. Eighty-five per cent had received an education of secondary school or above.

** Source: Invest Hong Kong