Insurance survey conclusions

Insurances today cover almost all aspects of individual and business activities, but individuals normally restrict the purchase of private insurance to five major areas - car, house, travel life and health. This study examines what the Maltese are doing in this respect and addresses some common concerns on each of these five sectors.

Car insurance

As many as 92% of those surveyed own, or contribute to a car insurance policy; the remaining 8% do not. This reflects the pervasive use of the private car in Malta, with a maximum of 98.6% for those aged 51-65, but goes down significantly for persons aged 65 and over to 69.6%.

The majority of car owners are generally satisfied with their insurance policies and by the way they are treated by the insurance companies. In fact, as many 81.5% of those who actually own one said so when asked.

The remaining 18.5% are not satisfied. Dissatisfaction is highest among persons aged 36-50 (23.6%), followed by the youngest category of persons, under 25 year olds, at 22.5%.

Home insurance

In comparison, home insurance policies are not so widespread: only 49% of all the Maltese stated that they purchase one. The practice to insure one's house is significantly higher among the higher socio-economic groups (AB: 59.1% vs. DE: 40.2%). Older Maltese are the segment of the population, proportionately speaking, which least dedicate a part of their budget to cover their homes with an insurance policy.

Asked why they took out a home insurance policy, the majority (51%) stated that it was because they have a bank loan, which makes the policy obligatory in their case. The next main reason given by this group is 'to put one's mind at rest' (25.2%). These two reasons are in turn followed by 'fear of damage from inclement weather' (21.8%) and 'fear of thefts' (17%).

The existence of a home loan that necessitates house insurance extends to all age groups, including those aged 65 and over, among whom 55% gave this as a reason why they actually purchase a home insurance policy. Among the socio-economic groups, this same reason was most commonly given by AB members, at 61.5%.

From the data emerging from this study, it appears that the home insurance business is doing well in Malta for both insurers and insured: as many as 69% stated that they never felt the need for a claim. This is positive because it means that many do not have to face the ordeal of having to repair their damaged property for one reason or another.

From the point of view of the insurers, fewer claims translate itself into better profits and the possibility to keep premiums down. In this area, this study confirms that the number of dissatisfied customers is relatively low, a mere 6% of all insured - 2% because their claim had been completely rejected and the other 4.1% because part of their claim had not been met.

Those who stated that they did not purchase a home insurance policy were asked to explain why. Expense was the main reason quoted by those who do not own a home insurance policy, at 50.3%.

As many as 30.7% do not see much use of covering their homes with insurance, while a striking 11.1% stated that since the house does not belong to them, they do not feel the need to purchase home insurance.

A final question was whether the Maltese thought that it should be compulsory. The findings show that only 32.7% think that this should be the case, the rest unequivocally disagreed. Persons in the higher socio-economic groups were relatively much more in favour of compulsory home insurance than the members of the other groups: AB: 40.9%; C1: 36.6%; C2: 28.4%; and DE: 29.7%.

Travel insurance

More and more Maltese are travelling abroad, and this has resulted in substantial growth in the travel insurance market. In fact, asked whether they buy insurance when they travel, as many as 87.3% said that they do; 11% said that they do not while the remaining 1.7% did not provide an answer.

Though increasingly essential for many, travel from Malta is expensive because of the various taxes and charges one has to pay on top of the actual air or sea fares. To make things worse, in addition to the very high direct government departure taxes and airport charges, another Lm5 tax is imposed on each travel insurance, at times almost doubling the premium payable for coverage for a short holiday.

In this study, the Maltese were asked whether they consider this additional tax to be fair on them - 91% consider it unfair; only 8.7% consider this tax to be fair, 0.3% did not give a reply.

Life insurance

In Malta almost two-thirds of the population is not covered by life insurance. This study shows that only 35.7% of the adult population are so covered, while the remaining are not. Least covered are the older generations, to the extent that while the national average is 35.75, only 23.9% of those aged 65+ are.

This study confirms that there is a big difference in the extent of life coverage across socio-economic groups, with AB members registering a relatively high 50% coverage, which is double that registered by DE members. This fact should be disquieting because it simply means that there is a very different appreciation of life dangers among the different social groups in Malta.

What is perhaps worse is that the tendency for life coverage is lower among those occupations that carry more physical hazards. Skilled manual workers pertaining to the C2 component are effectively much worse provided for than those occupations that carry fewer occupational hazards. As many as 62.7% of them have no such coverage at all.

Those who have actually purchased a life insurance were in turn asked why they had done so. Once again, it transpires that bank loans are the most important reason why the Maltese take out an insurance policy. It is to be recalled that 51% had declared that they had purchased house insurance because of their mortgage. As such, a segment of the population have their houses and their lives covered by life insurance because they are forced to do so before the banks agree to a loan.

The other reasons given are: 'because of my family': 20.6%; 'I wanted to put my mind at rest': 6.5%; 'my employer pays for it': 5.6%; 'I linked it with a savings plan': 4.7%; and 'my work is dangerous': 1.9%. It is indeed highly significant that only 1.9% stated that they insure their lives because their occupations are dangerous.

Similarly, those who do not have a life insurance policy were also asked why they had never taken one. Significantly, as many as 81.9% of those who did not have life insurance said it was because they consider it expensive. The other reasons given are quoted by only small numbers: 'I do not work in a dangerous place': 7.3%; 'it is now too late for me': 5.2%; 'I think it is unnecessary': 2.1%; 'I have been negligent about it': 1%; and 'it is not worth it': 1%.

Medical insurance

The last type of insurance policy researched by this study is private medical insurance. Only 14% of respondents are covered by private medical insurance. Once more, the detailed figures show that there is a big social divide between those who are covered and those who are not: AB respondents register a 27.3% level of coverage, as compared to 18.8% among C1; 9.8% among C2 and a mere 7.8% among DE.

It is clear that private medical insurance appeals much more to, or can be more afforded by, the higher socio-economic groups. Those who are covered by private medical insurance were in turn asked why they had taken out the policy. The most frequently given reason was that private hospitals are preferred to state hospitals (40.5%). This was followed by 26.2% stating that 'they wanted to put their mind at rest'; and 23.8% saying that they are so covered 'because their employer pays for it'. A last group, made up of 21.4%, stated that through private medical insurance they get served more quickly.

It is interesting to note that preference for private hospitals is something which is appreciated by all social groups, and this reason was always the most frequently mentioned among those who actually pay private medical insurance, although not at the same level.

Thus it was mentioned by 50% of AB respondents; by 42.9% of C1 respondents; by 30% of C2 respondents and by 40% of DE respondents. When the data are analysed by age group however, these similarities fade, and only 14.3% of those aged 26-35 give this as a reason, in contrast to 70% of those aged 51-65 who did so.

Those who are not covered by private medical insurance were also asked why they had never taken one. As many as 66.3% of those who are not covered spontaneously gave expense as their unprompted reason. Interestingly though, among those who do not have private medical insurance, a good number (28.3%) spontaneously confided that they prefer state hospitals because of the better services available there. An additional 14.3% do not feel the need to pay twice for medical coverage and insisted that they already pay a lot of taxes and do not need to pay twice for their medical requirements.

Interestingly too, preference for state run hospitals among this group is predominantly higher among AB (at 43.8%) than among members of the other socio-economic groups (C1: 25.3%; C2: 34.8% and DE: 18.6%).

The last question in this study was intended to test the often-heard statement that medical practitioners often charge more, patients who are covered by private medical insurance when they visit their clinics. More than two-thirds (67.7%) confirmed that from their experience this was the case; 27.7% stated that this was not true, while 4.7% did not give an opinion.

This study strongly confirms that belief in the often-heard allegation that medical practitioners charge patients covered by private medical insurance more is pervasive among all the socio-economic groups and among persons in different age groups.

In summary it can be stated that this study shows that increasingly, insurance products are being bought by the Maltese, but not always because they perceive the risks and are prepared to cater for them. The banks are pushing many to buy house and life insurance policies much more than people might effectively want to.

Also, the disparate coverage very evident among different socio-economic groups continues to suggest that these products and the benefits they imply can continue to widen the gap between the haves and the have-nots, as a result of the latter's inability to afford to cover the risks endemic in contemporary lifestyles and occupations.

Socio-economic groups

AB - professional, managerial, administrative

C1 - higher clerical, clerical, supervisor, skilled craftsmen and technicians, owner/manager of small business

C2 - skilled manual workers and foremen

DE - semi-skilled, unskilled, labourers, casual workers and persons whose income is provided by the State.