Bermuda residents can expect the cost of their health insurance premiums to jump next year after a big increase in claims in 2009.

The bosses of two major health insurance companies, Argus and BF&M, yesterday told The Royal Gazette that the number of referrals to overseas hospitals — particularly for heart disease and cancer — has spiked this year.

Argus chief executive officer Gerald Simons and BF&M CEO John Wight both said premiums would have to rise as a result, but did not specify by how much.

Both companies have outlined an increase in the frequency and severity of claims in their recent earnings statements. BF&M said benefits paid out on health insurance policies increased by 47 percent during the first nine months of this year.

Argus said its overall claims and benefits paid out rose 13.4 percent, in its latest six-month report, though did not specify a figure for health care claims.

Local insurers are in discussions with Ministry of Health representatives in an attempt to work out how health care can be provided more cost-effectively and whether more can be treated locally, Mr. Wight said.

"We are seeing more cancer treatments and more cardio treatments than ever before being referred overseas," Mr. Wight added.

"Sometimes these things spike in one particular year, but over the past few years we have seen a trend that we don't expect to change, because of Bermuda's ageing population.

"It's a trend that's moving in the wrong direction in terms of the cost of health care."

Around 11 percent of Island residents were seniors in 2000 — that figure is expected to rise to 22 percent by 2030, according to Government projections.

The combined effects of improved technology making more treatments possible, new drugs and an ageing population ensured that inflation in medical costs ran higher than in the wider economy, Mr. Simons said.

Bermuda's health care costs had totalled around $447 million in 2007, he added. "You could allow 15 percent for two years of medical cost inflation and so I would estimate that it could now be 10 to 11 percent of Gross Domestic Product (GDP)," Mr. Simons said.

By comparison, the US spends around 16 percent of its GDP on health care.

Bermuda's GDP in 2008 was a little more than $6 billion, Government figures revealed this week.

On the increase in claims, Mr. Simons said: "For some reason we are seeing more large-dollar cases and the average cost is much higher than it has been. We don't know why that is, but it has led to much bigger claims."

As claims go up, so must premiums, Mr. Simons said. "The formula is very simple and I'm sure people understand it. Most of what people pay in premiums goes out the door to pay health care providers — and premiums must cover the cost of claims and administering a health insurance plan."

The incidence of both cancer and heart disease was impacted by lifestyle and dietary factors, Mr. Simons added.

Michelle Brock Jackson, executive vice-president of Group Insurance at Argus, said trends indicated that health care costs would continue to rise. Everyone could do their bit to help solve the problem, she added.

"We have to do all we can to take personal responsibility for our own health," she said. "We all have a part to play to focus on prevention."

Mr. Wight agreed. "In Bermuda, we have a high incidence of obesity and diabetes," he said. "As a country, we have to focus on taking better care of our health, because that will result in lower health care costs and lower premiums."