New health insurance premiums down 13% in 2015: LIA Singapore
Integrated Shield Plans (IPs) and IP riders, which contribute to the bulk of new health insurance premiums, saw premiums decrease almost 20 per cent year-on-year to S$204 million.
- Posted 10 Feb 2016 18:33
- Updated 10 Feb 2016 18:59
SINGAPORE: New health insurance premiums in 2015 totalled S$231 million, down 13 per cent from a year ago, said the Life Insurance Association Singapore.
Speaking at a full-year results briefing, Mr Khoo Kah Siang, President of LIA Singapore attributed the bulk of the decrease to base effects, brought on by higher premiums earned in the first half of 2014 as a result of premium increases in the period.
Premiums on Integrated Shield Plans (IPs) and IP riders – policies run by private insurers to cover hospitalisation in Class A & B1 wards in restructured hospitals and private hospitals – decreased almost 20 per cent year-on-year to S$204 million. These products contributed to 88 per cent of new health insurance premiums in 2015.
Overall, the industry still managed to grow weighted new business premiums by 8 per cent year-on-year, to S$3 billion in 2015, even though the year was marked by the implementation of tighter regulatory standards under the Financial Advisory Industry Review and the introduction of MediShield Life.
There was a 7 per cent growth in weighted annual premium products to S$2 billion, and a 9 per cent growth to S$940.8 million of weighted single premium products. Of the weighted single premium products, 16 per cent comprised CPF-funded policies.
Direct Purchase Insurance products, which made their debut last April, drew almost S$550,000 of weighted new premiums. These are basic life insurance plans sold without financial advice and purchased directly from customer service centres or websites of life insurance companies in Singapore.
Total premiums for new annuity products fell close to 45 per cent to S$16 million, as consumers favoured the government’s CPF Life scheme, said LIA Singapore.
CHANGES MADE IN RESPONSE TO MEDISHIELD LIFE
MediShield Life, the universal healthcare insurance scheme for Singapore residents which covers treatment in Class B2 & C wards, kicked in on Nov 1 last year.
In response, LIA Singapore said insurers have made changes to ensure that consumers have a better understanding of where the premiums have gone and where the claims are coming from.
“We have enhanced our processes, our statements, which will show the split of premiums and claims between MediShield Life and the private portion of our Shield plans,” said Mr Ken Ng, Deputy President of LIA Singapore.
All five IP insurers in Singapore are also working with the Health Ministry to launch a standard plan for Class B1 wards within the first half of this year. More details will be announced in the next two months, but LIA said that premiums for the plan will differ, as the prices set are based on each insurer’s own risk assessments.
“There’s certainly going to be demand for the standard B1 (plan), for both customers who want better coverage compared to the standard MediShield Life Plan, as well as people who are on the private plan – if they want to downgrade because of affordability issues – they have more choices,” said Mr Khoo.
In June last year, the five IP insurers said they will not increase premiums for the private insurance coverage portion of IPs for the first year following the introduction of MediShield Life.
"Beyond that, if medical costs increase, then the premiums will have to increase to keep pace," said Mr Ng, adding that the industry is looking at various ways to make sure that costs are contained, so that premiums are affordable.
The life insurance industry paid out a total of S$5.97 billion to policyholders and beneficiaries in 2015.