Insurers suffer losses on Intergrated Shield Plans, premiums may rise
AIA, Aviva, AXA, Great Eastern, Income and Prudential may raise premiums
There is a strong possibility that premiums on Integrated Shield Plans (IPs) could rise further, with the six insurers offering such plans suffering underwriting losses last year - their second straight year in the red.
The losses came despite most insurers raising their premiums last year, with the biggest hikes falling on private hospital plans and riders.
When asked if IP and rider premium hikes were on the cards, Prudential said it was reviewing this. NTUC Income told The Straits Times that it would not raise premiums for existing plans for now, while the other insurers said they were monitoring the claims ratio and would review premiums from time to time.
The returns of AIA, Aviva, AXA, Great Eastern, Income and Prudential show that they have been suffering losses since the launch of MediShield Life in November 2015.
Last year, their total losses skyrocketed to $390 million, primarily due to AIA's $284 million deficit.
This is well up on 2016's underwriting losses of $99 million, which was the first time in a 12-year period since the introduction of the market's first as-charged plan that all insurers swung into the red.
AIA told The Straits Times that its underwriting loss last year was $40 million.
It said the negative underwriting result of $284 million included a one-off hit of $244 million, mainly from reinsurance and other one-off changes last year. Stripping out the distortion, the six lost $146 million last year.
Great Eastern told The Straits Times that it has one of the largest IP portfolios here, of which a large proportion is private hospital plans, which "contributed to our level of underwriting loss".
Income and Prudential were the only ones that experienced a dip in claims ratio last year from the year before, which means relatively lower claims compared with premiums.
Both insurers had hiked premiums for IPs and riders, which put them on a stronger footing.
The individual and industry underwriting losses posted in the past two years come at a time when net claims faced by the insurers outpaced premiums earned, particularly for plans covering private hospitals.
A Life Insurance Association (LIA) Singapore study found that average inpatient claims in private hospitals expanded 8.1 per cent in recent years. This is coupled with a 7 per cent compound annual growth in claims frequency for private hospital Integrated Plans.
In March, Health Minister Gan Kim Yong told Parliament that zero payment "dilutes the personal responsibility to choose appropriate and necessary care".
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