AIA joins Aviva, Prudential in raising IP premiums

People riding an escalator past an AIA Group advertisement in Beijing, China, on Nov 23, 2011.
People riding an escalator past an AIA Group advertisement in Beijing, China, on Nov 23, 2011. PHOTO: BLOOMBERG

Insurer AIA Singapore will raise the premiums of its Integrated Shield Plan (IP) relating to private hospitals from 2 per cent to 23 per cent from Jan 25.

The move comes soon after rival Aviva raised its IP premiums by between 10 per cent and 25 per cent, while Prudential hiked its premiums by 8.8 per cent to 36.6 per cent. The increases apply to IPs that cover private hospitals.

The other three IP insurers are AXA, Great Eastern (GE) and NTUC Income. Industry observers believe it is only a matter of time before they raise premiums as well, although AXA may be the last to go as it began offering the policies only in May.

The insurers are raising IP premiums now that the 12-month moratorium - which was imposed when MediShield Life was introduced on Nov 1 last year - has expired.

AIA has started sending letters to affected policyholders, informing them of the increases. The Prudential and Aviva premium rises start this month.

The AIA premium hike comes with some enhancements to the IP, subject to certain conditions. They include offering the highest policy annual limit at $2 million and extending the pre- and post-hospitalisation benefits by up to 13 months. These are the longest in the IP market.

Ms Ho Lee Yen, AIA's chief marketing officer, noted that the need to increase IP premiums is a result of escalating claims costs.

"While AIA Singapore has been doing our best to actively manage the increasing claims costs internally, it has become necessary to increase the premiums of the AIA HealthShield Gold Max A for it to be commercially viable for us... Larger medical bills, greater healthcare consumption and the increased use of newer and costlier procedures which leverage medical technological advancements have resulted in an increase in medical costs and claims for IPs," she said.

It has been reported that NTUC Income plans to increase the premiums of some IPs next year.

GE said it is reviewing its IP premiums and plans, and is unable to provide any timeline at this stage.

Mr Andre Czanik, AXA Singapore's chief health officer, said it has no plan to increase IP premiums.

A version of this article appeared in the print edition of The Straits Times on December 06, 2016, with the headline 'AIA joins Aviva, Prudential in raising IP premiums'. Print Edition | Subscribe