Forum: Extend direct purchase insurance model to Integrated Shield Plans to reduce premiums

On April 1, we were told that new Integrated Shield Plan policies would come with lower rider premiums to help curb rising healthcare costs (New IP riders with lower premiums will make private healthcare more sustainable: Ong Ye Kung, April 1). A day later, several insurers announced premium increases for existing policyholders (Five of seven private health insurers hike IP premiums for existing plans, April 2).

Taken together, these moves send a confusing and somewhat contradictory signal to consumers.

There is also a risk that many Singaporeans may be drawn to the allure of cheaper premiums, only to end up underinsured when faced with higher deductibles and co-payments at the point of care. When illness strikes, affordability is determined not by premiums alone, but by the total out-of-pocket burden.

It is also worth noting that a portion of current premiums goes towards commissions for agents and agencies, estimated at 12 per cent for new policies and 2 or 3 per cent for renewals.

In other areas of insurance, Singapore already allows direct purchasing without agents through direct purchase insurance and general insurance products.

These direct channels typically offer lower premiums because they remove commission layers, although they require consumers to buy directly, mostly online, and take on the responsibility of managing applications, underwriting and claims without personalised advice.

Could a similar direct purchase model be extended to Integrated Shield Plans to meaningfully reduce premiums and overall healthcare costs, while still ensuring that Singaporeans remain adequately protected?

Chua Jun Jin (Dr)