Customers are sticking with private Integrated Shield Plans (IPs) because they enjoy the option of having better cover, including being able to choose their own doctors, said the Life Insurance Association (LIA) yesterday.
There had been some concerns that policyholders might give up the IP portions of their plans after MediShield Life was launched on Nov 1. But LIA president Khoo Kah Siang said that insurers have not seen any significant withdrawals from IPs in the last 12 months.
He added that the five private IP insurers do not make "excessive" profits from handling the policies.
Dr Khoo was responding to calls from the public to provide more transparency on its pricing.
On Sunday, about 3.9 million Singaporeans and permanent residents (PRs) automatically came under MediShield Life, an improvement of the old MediShield. Enhancements include higher claim limits and coverage for life.
About 64 per cent of Singaporeans and PRs have IPs, which build on what MediShield Life has to offer. Premiums are typically higher for such plans to match the better coverage they provide, such as stays in Class A or private hospital wards.
The five private IP insurers have promised to freeze premiums for a year following the launch of MediShield Life. However, the premiums are expected to rise after that.
Dr Khoo said: "We're committed not to increase premiums for the IP portion for one year as the implementation of MediShield Life can be quite challenging. We will continue to work with the Government and medical providers to manage cost escalation... so as to offer reasonably priced premiums."
IP claims have escalated by an average of 12 per cent to 17 per cent a year in the past few years, with private hospital claims rising the fastest. Last year, claims amounting to $488 million were paid out.
In the first three quarters of this year, $127 million or 87 per cent of new health insurance premiums amounting to $146 million went to IPs and IP riders.
This represents a 24 per cent dip from the same period last year.
The LIA said the 2014 performance - specifically the first quarter's results - had carried the impact of insurers' pricing revisions in March 2013.
If this factor is stripped out, sales of IPs recorded for the second and the third quarters of this year were at levels similar to the corresponding period last year.
The LIA said consumers are likely to adopt a wait-and-see approach, given that MediShield Life was launched only on Nov 1.
All IP insurers have trained their financial adviser representatives on the changes to MediShield Life and prepared guidebooks with frequently asked questions. Some IP insurers have also enhanced their plans.
A standard IP with benefits pegged at Class B1 wards in public hospitals is in the works to cater to people who want to have an option of enhanced and affordable coverage beyond MediShield Life.
The latest LIA figures indicated that the industry achieved a 15 per cent increase in weighted new business premiums to $813 million in the quarter to Sept 30.
Annual-premium products jumped 21 per cent to $541.9 million while single-premium investment- linked insurance products grew 13 per cent to $60.6 million from the corresponding quarter last year.
The LIA attributed the performance to new product launches, sales and marketing initiatives, and an increased take-up in savings-oriented products through bancassurance.
The industry recorded a steady 7 per cent growth to $2.17 billion of weighted new business premiums for the nine months to Sept 30 from a year ago.