Your insurance premiums are about to go up. Here’s why

Aug 11, 2016 01.00PM |
 

by Andrea Wang

ABOUT a year after MediShield Life (MSHL) replaced MediShield, Integrated Shield Plan (IP) users could see an increase in their premiums as soon as October this year.

Such policyholders could see their premiums increase by more than 20 per cent due to “ballooning medical costs and worsening claims experience”, reported The Business Times (BT) on Wednesday (August 10). The rise would also tie in with the expiration of the IP insurers’ promise to hold off premium increases for a year since the launch of MSHL last November.

A few assumptions (based on past industry data) were made here when calculating this figure – such as claims going up by 5 percentage points a year. According to the BT report, insurers will have to raise premiums by 21 per cent if they are to break even over the next three years.

How much exactly an individual’s premiums will rise will still however depend on other factors, including age, the type of insurance policy, and its coverage.

Apart from rising medical costs, other pressures facing insurers include making money. In a separate report yesterday, BT said three out of these five IP insurers incurred losses last year.

These insurers, Aviva, NTUC Income and Prudential, have chalked up losses due to the skyrocketing cost of claims that have gone up at a faster rate than anticipated, BT said.

AIA and Great Eastern were the two insurers that recorded profits. A sixth insurer AXA Life also offers IP, but because they only started offering plans in May this year, they were excluded from the report.

If there’s a silver lining for insurers, it’s that Singaporeans are increasingly recognising the value of health insurance, and in particular, IP. The Life Insurance Association (LIA) said that there has been a 25 per cent rise in new premiums in the first half of the year, with a sizeable portion coming from IPs.

Back to the premium increases. It is too soon to say how the expected increases may influence individuals, but available government grants could mean that you may not need to pay out-of-pocket costs – something which the BT report left out.

These subsidies are the Premium Subsidy, Transitional Subsidy, Pioneer Generation Subsidy and Needy Subsidy. To find out more about these subsidies, click here. Or, contact your insurance provider for more information on how the upcoming premium increases will affect your policy.

 

Featured image Health Insurance Premiums by Flickr User Sharon Sinclair(CC BY 2.0).

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