The agents said they are looking out for their clients’ interest by doing so, because premiums are cheaper when they are young and they would not qualify for such policies when they are older and have pre-existing illness.
These policies are the “first things” they would pitch to prospective clients, especially if they are young, said the agents, adding that IP full riders are by some distance the most popular policies they have sold.
Their common sales pitch? The IP full riders are a “hedge against (potential) risks of very large hospital bills”, and they offer policyholders, particularly young Singaporeans, a “peace of mind”.
On Wednesday, the Ministry of Health (MOH) announced that new IP riders must feature at least 5 per cent co-payment, in a bid to curb “over-consumption, over-servicing and over-charging” — in the words of Senior Minister of State (Health) Chee Hong Tat — which will lead to patients and policyholders paying rapidly escalating fees and premiums over time.
IP full riders allow policyholders to pay nothing for hospitalization and treatment after forking out a higher premium initially. Today, more than 1.1 million Singapore residents have IP full riders, making up 29 per cent of the resident population. The growing popularity of IP riders — both partial and full — saw the proportion of Singapore residents with these policies rise from 19 per cent in 2011 to about 35 per cent in 2016, based on figures from the MOH and the Life Insurance Association.
IP full riders were first introduced in 1994. In 2016, all six IP insurers — AIA, Aviva, AXA, Great Eastern, Income and Prudential — chalked up underwriting losses, between S$5.1 million and S$29.2 million, for the first time. But the insurance industry may have itself to blame, going by the accounts of the prevalent industry practices from the insurance agents.
An insurance agent with AIA, acknowledged that the sales pitches “may have to do with why (such plans) are so popular”. “Usually I would also tell them that without the plans, their income and savings might one day be spent on hospital bills, so it’s best to cover potential medical costs like hospitalisation,” said the 25-year-old, who has been in the industry for three years. “We will also share past stories of how other patients avoided paying a large amount as anecdotes.”
She added: “However, the decision still lies with them, and we propose plans based on their preferences and budget. If they don’t have the financial capability of affording such plans, I would not force them to buy.”
A 55-year-old agent, added: “(IP full riders) are usually the first plans we would encourage young people to buy, because most of them don’t have any existing chronic conditions yet. It works out to be about S$30 a month, which is affordable. It is best for them to buy a ‘peace of mind’.”
‘NOT MORALLY WRONG’
The higher commissions they will pocket “definitely encourage” some agents to sell full rider plans, said an agent with Great Eastern. The 28-year-old added: “Most would not feel it is morally wrong to promote plans that give their clients better cover… So I wouldn’t say this is right or wrong, but it results in a win-win situation. Personally, I would still advise clients based on what is most appropriate for each of their risk profiles.”
An agent - aid clients who are warded are encouraged to “upgrade to private hospitals with their interest in mind, given the limited beds and nurses in public (hospitals)”.
He said: “Our first advice would be to consider the rider, and if they cannot afford it, then we would adjust according to their means. It depends on individual.”
But some clients themselves want to “make the most” of what they are insured for, resulting in them opting for “unnecessary” treatments at times, said the agents, who agreed that the co-payment approach would encourage more prudent health-seeking behaviors.
Data from the MOH showed that full rider plans have resulted in higher bills and more frequent claims, even though their policyholders are generally younger and less susceptible to chronic disease.
To reduce their losses, some insurers had introduced several measures to varying extents of success. Income, for instance, introduced riders with partial coverage in 2008 but reinstated full cover for these plans three years ago, after losing market share to other players.
Last May, Prudential adjusted the pricing approach for full rider plans, pegging premiums to the size of claims — a measure has “proven to encourage more prudent use of medical services”.
According to the MOH’s figures, rider premiums have increased by up to 225 per cent on average over the past two years.
But the over-consumption and over-charging of medical services have also had an indirect effect on premiums for IP policies across the board, which went up by as much as 80 per cent over the same period, with older policyholders and those on private hospital plans experiencing higher increases.
It is unlikely that the demand for full riders — which will still be available until April next year — will surge because prospective policyholders will have to transit to new riders with co-payment from April 1, 2021, said the agents.
It doesn’t make much difference to jump the bandwagon now, as the riders are a long-term commitment and not like buying a plane ticket. I have some friends and clients calling me to enquire about the changes but none have signed up. If the client wishes to do comprehensive tests, they must first have a condition, or be hospitalized… How do you force a condition out of yourself? I don’t think anybody would also want to get hospitalized for no reason.”
IRRESPONSIBLE CONSUMERS LIKELY A MINORITY: SMA
In response to TODAY’s queries, Singapore Medical Association (SMA) president Wong Tien Hua noted that IP riders are “very attractive options for patients” because they provided good value when the patient needed medical treatment.
“We do not think that patients wilfully abuse medical services for monetary gain, and examples of irresponsible usage are most likely in the minority and should not distract us from adopting new measures to improve our healthcare,” he reiterated.
Nevertheless, Dr Wong said it was “clear from recent reports” that medical charges have been increasing at such a rate that the current level of premiums for IP and IP riders will become unsustainable.
Noting that co-payment has been “an integral feature of Singapore’s healthcare schemes”, Dr Wong nevertheless said the goal of sustainable healthcare cannot be met with just one initiative.
SMA, which represents the majority of doctors here, was part of the industry-led Health Insurance Task Force. To manage rising IP premiums arising from healthcare costs, the task force recommended, among other things, co-insurance and deductibles “so that patients engage medical services with due consideration to the cost of the service and recognise that they have a stake in the decisions made”, Dr Wong said. “The issuance of co-payment requirements is one way to encourage individuals to play an active role in managing their medical care costs, to look for better value, especially when they are acutely aware of the charges incurred,” he added.
Other recommendations by the task force included the need for medical fee guidelines and consumer education.
Following the latest announcement, Dr Wong said SMA hopes insurers will be able to “better control costs and consequently translate these to lower premiums for patients”.
The Singapore Medical Council, a government body that regulates medical practitioners here, said it will issue a circular to doctors on their website on the MOH’s move.
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