Insurers to offer more affordable Integrated Shield Plan

FireIce SG

SINGAPORE: Insurers that offer Integrated Shield Plans (IPs) will introduce a new product in May to give Singaporeans an option of additional coverage beyond MediShield Life, the Ministry of Health (MOH) said on Tuesday (Mar 15).

The Standard Integrated Shield Plan, a private insurance product, is targeted at Class B1, and will allow a more affordable option for who want to downgrade from Class A and private hospital IPs. MediShield Life provides coverage sufficient for services at Classes B2 and C wards.

During public engagement sessions in 2014, the MediShield Life Review Committee found that Singaporeans wanted affordable IPs, with coverage above the B2 and C class wards but at affordable premiums. There was also concern with rising IP premiums over time and were confused about the difference in benefits for different plans.

Under the Standard IP, patients will stay in a 4-bedded ward with air-conditioning and TVs. Patients will also be able to choose their own doctor and have 20 per cent subsidy.

Other Standard IP features include claim limits sized to fully cover nine out of 10 public hospitals' Class B1 bills, coverage for hospital stays and selected outpatient treatments and co-payment features of claim limits, deductible and co-insurance.

MOH said it will review the Standard IP from time to time to ensure that the benefits remain relevant to policyholders.

PREMIUMS TO VARY FOR STANDARD IP

Although benefits of the Standard IP are identical across all IP insurers, premiums will vary across insurers based on their pricing approach. The insurers are AIA Singapore, Aviva, Great Eastern Life, NTUC Income and Prudential Assurance, said the Life Insurance Association Singapore (LIA).

All insurers have committed to keeping the additional private insurance component of the Standard IP premium fixed for the first two years from launch.

On average, premiums for Standard IP, including the premiums for the MediShield Life component, will be:

A check shows Great Eastern Life offers the cheapest premiums for the Standard IP compared to the other insurers. The Health Ministry said Medisave can be used to fully pay for all insurers' Standard IP premiums up to the next birthday age of 75 years.

Currently there are four non-as-charged B1 plans with different benefits. Non-as-charged plans refer to those with sub-limits included.

Policyholders on these plans will be given the option to switch to Standard IP without additional medical underwriting. The same goes for Singaporeans with Class A or private hospital IPs.

However, policyholders who switch to another insurer will need to undergo underwriting. Insurers are allowed to assess, approve with or without exclusions based on their own risk assessment frameworks.

This also applies to policyholders who only have MediShield Life. Exclusions may be applied to those with pre-existing conditions if they do not have an IP or switch insurers.

For example, if a patient with a pre-existing knee-related condition applies for the Standard IP, insurer will provide coverage, except for knee-related conditions. If he is hospitalised for a knee injury, he will be covered under the benefits he receives from MediShield Life. However, there will be no payout by his additional private insurance coverage of the Standard IP.

The Standard IP premiums will be higher than MediShield Life premiums but more affordable than Class A and private hospital IP premiums.

For example, for those aged 36 to 40 years old, policyholders will pay between S$358 and S$398 for a Standard IP. Compared to S$310 for MediShield Life, without subsidies, and more than S$400 for Class A and private hospital policyholders.

The Health Ministry said Singaporeans should carefully consider their preferences and affordability of premiums over the longer term, as IP premiums may increase significantly with age. They should also bear in mind that existing medical conditions that are covered under their current plan may not be covered if they switch to a new plan.

- CNA/kk/ek

FireIce SG

THE pressure of rising claims continue to weigh on the five Integrated Shield Plan (IP) insurers, with two moving to raise rider plan premiums, and another expected to follow suit in the next few weeks.

Of the five IP insurers, Prudential has raised rider premiums, while Aviva will do so this April. Sources said AIA also has a similar plan.

The Business Times was told by the remaining two IP insurers - Great Eastern and NTUC Income - that they have no intention of raising rider premiums for now.

Riders are complementary products introduced by insurers to provide coverage for the co-insurance and/or deductible portions of the bill when claims are made under the IP.

These are not approved by the Health Ministry (MOH) for Medisave and are products paid for by cash.

Last June, the Life Insurance Association Singapore (LIA Singapore) had said that the IP insurers had agreed to freeze the top-up portion of all IPs for a year, following the implementation of the government's universal healthcare scheme, MediShield Life.

At that time, LIA also made clear that the IP insurers were unable to keep premiums of rider plans unchanged as claims experience have been higher than expected over time.

Four months later, Prudential raised its premiums for two kinds of rider plans by between 3 and 14 per cent, across the different age bands. One provides coverage up to private hospitals, while the other provides even more coverage - from the first dollar for hospitalisation, up to private hospitals.

Said Tay Jin Li, vice-president and head of product management at Prudential: "The quantum of increase is based on actual claims experience for the different profiles. Our combined premiums remain competitive in our core age segment, even after the price increase."

Similarly, Aviva's director of product and marketing, Daniel Lum, said only premiums for the rider option that covers both co-insurance and deductibles for private hospitals were raised by between 30 and 60 per cent, across all age bands.

Even after the re-pricing, the insurer noted that this particular rider option is still more competitive for some of the age bands, compared to the others.

Mr Lum said the premium increase was communicated to policyholders from end February and the raise would take effect from April 1.

While details are not known, BT understands that in the next few weeks, AIA is also expected to do the same.

When asked, AIA said: "As is our usual best practice, we will continue to closely monitor and assess our plans based on our claims experience to ensure adequacy of premium rates and the overall financial soundness of offering these policies. We note that LIA Singapore had previously highlighted that, across the industry, the premiums of riders are expected to increase over time due to the claims experience being higher than expected."

Observers noted that the current freeze on all IP premiums lasts till November 2016. Thereafter, the insurers are expected to conduct their individual reviews to decide whether or not to raise 2017 IP premiums.

But with the escalating claims experience not arrested, policyholders might see higher IP premiums the next year, they pointed out.

Rising hospital charges, increasing number of hospital admissions and higher medical inflation have led to a bigger average claim size, which has narrowed underwriting profits from the IP business here in recent years.

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