Employees across the Island may discover their pay packets shrinking in the coming months as health insurance increases of as much as 20 percent kick in.Most insurance companies are having to increase their fees to cover increases in Bermuda Hospitals Board rates, which come into effect on April 1 each year.The Island’s ageing population is adding to upward pressure on premiums, exacerbated by the departure of guest workers who had been paying into the system.The Royal Gazette understands that some companies are being asked to up their payments by as much as 20 percent, and employers are now thrashing out new contracts with insurers to get a better deal for their staff.John Wight, president and CEO of insurance company BF&M, estimated that although different groups renew at different times throughout the year, more than half the insured groups in Bermuda renew between April and July.“The ‘risk’ to insurance companies is lessened if most or all of the annual rate increases put through by insurers follows the timing of the annual rate increases put through by the Bermuda Hospitals Board,” Mr Wight said.“It is also the norm for groups insurance rates to go up annually but in unique cases they might remain the same or even go down in a particular year if the loss experience of that group is very good — if the claims are much lower than the insurance company priced for in that one particular year.“Insurers tend to look at prior year and years loss experience of an employer group along with other items such as medical cost trends and new services offered by the hospital, in pricing.”Mr Wight added that several factors were impacting health costs globally, but an aging population was fuelling health costs in Bermuda.“The ageing population in Bermuda was magnified when many expat workers, largely in the 25 to 55 age bracket, left the Island during the past several years,” Mr Wight said.Other causes of medical inflation on the Island include annual HIP and Mutual Reinsurance Fund rate increases, rising medical costs in other countries, a lack of overutilisation controls on regulated services, and improving technology and treatment options extending time to death of persons with chronic diseases, particularly related to cancer and heart disease.“Health care and its financing is a complex issue globally and every country is grappling with the balance between accessibility and affordability,” Mr Wight said.“Thus Bermuda is not unique to the challenges that we face.”