Survey indicates, fire insurance prices vary greatly, with a difference of up to 90%. The premium difference between fire insurance companies is as high as $150,000
(Hong Kong – 6th March 2023) With the announcement of the Ad Valorem Stamp Duty (AVD) concessions on first home purchases, the property market in Hong Kong has experienced stimulated growth. When purchasing housing, prospective buyers must consider ancillary costs beyond the property price, including building insurance - commonly known as fire insurance - which is mandatory for obtaining a mortgage from banks.
Given the relative lack of consumer awareness around fire insurance products and pricing, OneDegree Hong Kong Limited (“OneDegree”) recently commissioned a survey of its fire insurance clients to gather insights. The findings indicate that more than 90% of the respondents do not know enough about the details of fire insurance and they prefered to buy fire insurance directly from the mortgage bank or the insurance company before because of convenience or avoiding spending time searching for other fire insurance products. However, over the full policy term, total premium cost savings could amount to HKD 150,000 or more via OneDegree's offering.
The average annual premium varies by more than 40%, and the difference is as high as $150,000 or more
According to the survey data, after independently choosing a fire insurance company, the average annual premium difference was around 40% of what they used to pay before, with the maximum difference reaching up to 90%. Survey results show that the maximum annual savings could be up to HKD 5,100. Given over half of respondents had a 30-year mortgage, it is estimated that total savings on fire insurance premium over the full policy term could amount to HKD 153,000.
OneDegree;s Fire Insurance customers increased by 168% year-on-year, and the insured amount has exceeded 10 billion
"Compared to 2021, our fire insurance customer base has increased by 168% in 2022, while premium income rose 161%. Total 2022 sum insured as high as over HKD 10 billion, up by 173%. The sharp increase reflects more property owners are choosing their own fire insurers rather than opting for the one referred by mortgage banks, as potentially customers could save up more with a competitive pricing as we are only pricing it at 0.03% on insured amount while most competitors are charging it at 0.15% to 0.2%. We estimate that we have helped our customers to save up over HKD 24 million in 2022. This is the beauty of virtual insurance, customers enjoy the biggest benefit from bypassing intermediaries both in terms of budget and processing time." said Alvin Kwock, Co-founder of OneDegree.
90% of respondents choose fire insurance from mortgage banks due to convenience, and nearly 20% have no idea that they can choose their own insurance company
More than 70% of respondents (73.5%) stated that they had previously purchased fire insurance products through banks that provide mortgage loans, or insurance companies recommended by them. Among them, 91.1% did so for convenience, or to avoid spending time searching for other fire insurance products. Additionally, nearly 18% of people did not know that they could choose to insure with other insurance companies, misunderstanding that they were unable to select cheaper fire insurance products themselves.
In general, calculating the insured amount based on the "property reconstruction cost" can achieve the lowest premium. However, the survey found that 90% of respondents believed that the property market price, outstanding loan balance, and loan amount were the only options for calculating the lowest premium, while only 10% chose "property reconstruction cost". This shows that homeowners have insufficient knowledge about fire insurance, which may cost them unnecessary additional fees.
OneDegree offers a guaranteed minimum price for fire insurance promising for refund, with a uniform charge of 0.03% of the insured amount
In addition to monthly mortgage payments, Hong Kong property owners also face daily living expenses such as management fees, utilities, etc. OneDegree understands the needs of every homeowner, and so it offers a best price guarantee for fire insurance throughout Hong Kong, only charging 0.03% of the insured amount as the premium. If a homeowner finds an equivalent fire insurance product with lower premium on the market, OneDegree promises to refund the difference.
No restrictions on property type or building age, and flexible insurance experience is valid for up to 180 days
OneDegree's fire insurance covers, regardless of age of building, residential properties such as tenement buildings, village houses, or older residential properties where generally a higher premium would be charged. Homeowners can also choose the effective date of insurance from 10 to 180 days after application, making it convenient to switch from another insurer to OneDegree without worrying about any adverse effect on their mortgage.
Furthermore, OneDegree's fire insurance can be purchased online, and can be tailored according to the requirements of each mortgage bank. Homeowners only need to provide simple information online, and OneDegree will submit relevant documents to the bank on behalf of the customer. After successful new application or transfer of insurance, customers will directly receive a notification from the bank, making the whole process convenient and fast, with no process fees.
Purchase fire insurance and get one year home insurance discount
From now until March 31, 2023, customers who purchase OneDegree fire insurance can get one year of home insurance for free (by way of premium rebate, up to HKD 800), protecting everybody’s home from the inside out.
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