Some insurers taking steps to contain claims costs
SINGAPORE — With premiums for Integrated Shield Plans (IPs) becoming unsustainable amid escalating claims by policyholders, at least one IP insurer is set to raise premiums next year, while others have adopted various cost-containment measures.
Only NTUC Income squarely addressed TODAY’s query on whether it would adjust IP premiums.
“We are reviewing the entire IncomeShield portfolio. At this point, we plan to increase the premiums of some plans in 2017. However, we are still working out the details, including the level of increase,” the insurer said.
Yesterday, an industry-led taskforce looking at healthcare insurance costs warned of escalating insurance claims for IPs, and called for measures to rein in the trend.
These include publishing fee guidelines to improve transparency on medical service costs and encouraging policies to be designed with co-payment features such as deductibles, so that policyholders would be more active in managing healthcare costs.
Asked if it planned to adjust its IP premiums, Aviva said the Life Insurance Association’s claims data showed that cost of claims for private hospital IPs has increased by 15 per cent annually because of increases in average bill sizes and incidence rates (the frequency of medical treatment).
“Given that Integrated Shield Plan premiums are dependent on claims experience, it is unsustainable for insurers to maintain the same premium rates if this continues in the long term,” said Ms Lee How Teck, chief operating officer of Aviva Singapore.
Ms Lee said Aviva recently partnered a medical group with a network of experienced private specialists, whose fees fall within a reasonable fee schedule that has been pre-agreed.
A pre-agreed fee schedule can help minimise cases where customers may be overserviced or overbilled, she said.
AIA Singapore’s chief marketing officer, Ms Ho Lee Yen, said it regularly reviews and enhances products and services to meet customers’ needs. It is setting up a panel of trusted medical professionals with “reasonable and customary charges observed in the marketplace” to better manage escalating claims and healthcare inflation here, she said.
A Prudential spokesperson would only say its policies are reviewed from time to time, while Great Eastern did not respond to media queries. The newest IP insurer, AXA, entered the market in May.
Commenting on the taskforce’s recommendations, Dr Phua Kai Hong, who is Associate Professor of Health Policy and Management at the Lee Kuan Yew School of Public Policy, said the current state of affairs reflected a preventable “market failure”.
Letting private insurers into the healthcare market had encouraged other stakeholders, such as third-party administrators, to cash in, which will cause premiums to swell, he said.
“Pandora’s Box is already opened … Why did we even allow IPs to be so generous?” he asked, noting that countries such as Canada have disallowed insurance plans that provide 100 per cent coverage.
Private insurance should play a “minor role” in financing healthcare and cover only catastrophic illnesses, he added.
Assistant Professor Ko Chiu Yu of the National University of Singapore’s economics department said fee guidelines, which were removed in 2007, are not necessarily anti-competitive.
But publishing historical charges is preferable as they cannot be manipulated, he said.
Also, fee guidelines issued by governments are less problematic than that issued by industry associations as the risk of collusion for the latter is higher, he noted.
He also welcomed the suggestion of having insurers pre-approve medical treatment to protect patients.
“Insurance companies have strong incentive to deny claims by citing the fine print (that the patients are unaware of) when they are post-approved,” he said. This could lead to risk-averse patients deferring timely treatment, leading to a higher final medical bill.
Dr Jeremy Lim, a partner at management consultancy Oliver Wyman’s Singapore office, said the recommended measures are useful, in particular the call for co-insurance and deductible features in policies.
Processes to identify inappropriate or excessive treatments are also important, he said, noting that there is tremendous variation for the same procedure at different hospitals. Data should be looked at collectively to identify possible inappropriate charges.
Pointing to the motor insurance industry, Dr Lim said: “It was hard to control motor claims fraud until there was a very rigorous effort to standardise processes to put claims through ... Now, I think those of us who drive can see how premiums have stabilised.”
The current model, he added, is dependent on the doctors and hospitals “behaving appropriately”.
“While the overwhelming majority of doctors indeed do so, it only takes a few black sheep to give the entire profession a bad reputation. It is the outliers who then encourage everyone else to behave likewise,” he said. NEO CHAI CHIN AND KELLY NG
