Costs of cover are expected to fall as more becomes known about the disease Rapidly rising premiums for insurance cover against Sars will probably drop as more becomes known about the virus, according to Insurance Commissioner Richard Yuen Ming-fai. The insurance industry has been under attack for its reluctance to provide Sars cover; only three insurers provide policies for the staff of private hospitals and 11 for private clinics. The risk of Sars has driven premiums four to six times higher than their 2002 levels. Premiums for some private hospitals had risen from $2 million to $5 million a year. Mr Yuen believed premiums would fall after insurers obtained more information about the disease through medical research and experience. He also believed private clinics and hospitals would work harder to keep their staff from being infected by Sars. These measures would lead to fewer Sars-related claims this year and that would also help drive premiums down. Hong Kong insurance companies paid $325 million for Sars-related death claims, making it the most expensive catastrophe in the claims history of Hong Kong. The previous claims record was held by Typhoon York in 1999, which led to a payout of $290.01 million. The huge payout for Sars and threats of terrorist attacks had combined to drive insurance premiums up. To reduce premiums, the Hong Kong Federation of Insurers (HKFI) last month proposed to cap compensation payouts to people who died or were injured at work. Mr Yuen said the issue was being studied by the Economic Development and Labour Bureau, and the Insurance Commissioner's office would provide information. Mr Yuen said one of his office's priorities this year was working on proposals to set up two funds that would pay up to $1 million in claims to individual policy-holders should their insurance firm collapse. The consultation would be completed at the end of March. Proponents of the funds said the proposals would help Hong Kong keep pace with international trends and improve protection for policy-holders. A consultation period would end in March. The proposals are being opposed by HKFI chairman Edward Lau Wan-kong, who said the funds would require increases in premiums paid by policy-holders, whose insurance bills were already growing. Similar programmes implemented elsewhere suggested that policy-holders would need to pay an amount equal to 1 to 2 per cent of their insurance premiums to finance the funds. Mr Yuen said all advanced insurance markets had set up compensation funds for policy-holders, and it was the duty of the authority to match international trends. There were many ways to establish such compensation funds that would avoid excessively high set-up costs.