Editorial

Insuring against risk has become a standard feature of today's lifestyle; merchants and tradesmen have for centuries insured themselves against risks, especially when huge sums of money are involved. However, insurance has steadily gained importance in ordinary people's lives, and in Malta no less.

There are compulsory insurances, such as National Insurance, which cushion the individual against loss of income from possible unemployment or ill-health, and also to provide a state-guaranteed retirement pension (now becoming increasingly inadequate, one of the reasons for the impending pension reform). And third party, fire and theft insurance is compulsory for motor vehicle owners.

However, a growing number of Maltese are taking other forms of insurance, covering life, property, travel and private medical treatment. Our latest opinion survey, whose findings we are publishing today, sought to establish the extent of such insurance and why some are choosing it, and others do not.

However we also wanted to find out whether those who have car insurance, i.e. all car owners, are satisfied with the service they are given by insurance companies. Surprisingly, as many as 81.5 per cent of those who said they had car insurance replied that they were satisfied. We say surprisingly because we often read letters in the newspapers from car owners saying they felt shortchanged by their insurance company, which did not uphold their claim. It is believed that motor insurance is not a particularly profitable class of insurance for the companies, and so it stands to reason that policies build in a number of conditions and fine print.

Another surprising result is that, given the high proportion of home ownership in Malta, just under half of Maltese home owners are insured - and that mostly because the banks, reasonably enough, make it a condition when granting a mortgage. Although most people who do not have a home insurance policy said they are put off by the expense, insuring the building alone is not too expensive, relatively speaking. However, with the rising price of property, annual insurance premiums could amount to a substantial sum if the owner wants to receive an amount reflecting the true value of his property in case of a claim.

Naturally, insuring the contents of the house would be more expensive and subject to stringent conditions by the insurance company. However one assumes that wealthy property owners would deem it sufficiently worthwhile to insure both house and contents, especially if these are very valuable. And with a worrying increase in the number of thefts from private property, one can never be too careful. It must be said, though, that the victims of such thefts are not exclusively wealthy individuals but include even old age pensioners (many of whom still persist in keeping relatively large sums in cash at home) living in very modest dwellings in the village centre.

One disappointing finding of the survey is that only 35.7 per cent of respondents have life insurance. And life insurance should be taken when one is young, since premiums become higher as one grows older. However, young people today either seem to be more confident about the future or they just want to earn money and spend it now. It could also be that whereas in the past, when National Insurance contributions were only a fraction of the 10 per cent of the salary an employee pays nowadays, the annual premiums paid were tax-deductible, this is no longer the case. If Government wants to encourage people to save more and invest in a life insurance it should at least write off a part of the annual life insurance premium.

A fairly recent development is for persons approaching retirement age to take out private life insurances which on maturity could yield them a tidy sum to make up for the increasingly inadequate national pension. Such insurance policies, coupled with retirement and private plans, should be encouraged, since they constitute the 'third pillar' of the pensions system expected to start operating soon.

Regarding medical insurance - which many of those preferring private to state medical and hospital care are taking - the survey confirmed the widely held view that doctors tend to charge patients more if they know they are insured. This is obviously a matter for the insurance companies to take up, but it is also, in the end, a question of ethics. Private medical insurance, covering private treatment and hospital care, would relieve the burden on the state health system whose running costs are expected to escalate when the new hospital comes on stream.