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MediShield Life: Insurance sector sees little impact on its business

SINGAPORE — As the Government moves closer to introducing an enhanced version of the MediShield scheme, the insurance industry expects only minimal impact on its business and products, at a time when demand for insurance continues to grow in Singapore.

Changi General Hospital A&E department. Photo: Ooi Boon Keong.

Changi General Hospital A&E department. Photo: Ooi Boon Keong.

SINGAPORE — As the Government moves closer to introducing an enhanced version of the MediShield scheme, the insurance industry expects only minimal impact on its business and products, at a time when demand for insurance continues to grow in Singapore.

Indicating that there will continue to be a role for additional health coverage, Dr Khoo Kah Siang, president of the Life Insurance Association (LIA), said “it is our commitment to work closely with policymakers, the healthcare sector and individuals to bridge the protection gap in Singapore”, indicating that not everyone has adequate coverage.

In particular, consumers need not worry about a massive increase in premiums for the private insurance top-up component of the scheme, also known as Integrated Shield Plans (IPs), said Dr Khoo, who is also chief executive of Great Eastern Singapore.

These plans, offered by Great Eastern Life, AIA, Prudential, NTUC Income and Aviva, provide benefits beyond MediShield coverage, such as treatment in Class A/B1 wards in restructured or private hospitals. The basic MediShield scheme covers only up to Class B2 wards. Currently, more than 60 per cent — or more than 2.4 million — of Singapore residents, have IPs.

“We would like to assure policyholders that there will be minimal impact on the premiums of private IPs,” said Dr Khoo.

Analysts whom TODAY spoke to said that potential premium increase notwithstanding, they do not expect the enhanced coverage provided by MediShield Life to negate the need for private insurance. “These insurers will have to work through the repricing of these products on the back of the changes and figure out how they want to treat the pre-existing conditions as they come into the MediShield Life scheme,” said Mr Andrew Taggart, PricewaterhouseCoopers insurance consulting leader for South-east Asia.

“Depending on the repricing, the new premiums may have some people wondering about affordability, but I don’t expect demand for IPs to fall,” he said. “MediShield Life is not changing the fundamental driver of why consumers take up an integrated plan, which is to have an additional level of care in private hospitals or better wards.”

With demand for IPs likely to continue, Mr Leong Sow Hoe, chairman of the Insurance and Financial Practitioners Association of Singapore, is confident that insurance agents will still have an active role to play in the new landscape.

“Many people are still unfamiliar with (integrated plans). The added features by MediShield Life will mean a greater need for us to educate the public and help them access the products. We are more than happy to see this happen,” he said.

Rising affluence in Singapore has contributed to a thriving life-insurance sector, which saw S$2.8 billion in weighted new business premiums last year, up 28 per cent from 2012, LIA data showed.

Mr Taggart said: “Our view is that there will be continued growth for the life insurance and pension market in Singapore, driven by the continuing growth of the middle class and the growth of wealth and affluent individuals.”

Dr Khoo was equally upbeat: In an interview with TODAY last year, he pointed out that the insurance penetration rate in Singapore is about 4 per cent in terms of premium per gross domestic product.

“This is lower than other developed economies, which are typically at about 7 to 8 per cent. So, Singapore is actually a growing market,” he said.

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