It was earlier reported that the Singapore Medical Association (SMA) had issued a public statement highlighting its displeasure with the Singapore insurance companies covering the national health Integrated Shield Plan (IP) (‘SMA reveals losses of IP insurers due to rapid rise in management fees and commission payouts‘, 29 Mar).

SMA revealed that IP insurers are losing money NOT because of excessive or higher claims by policyholders. Rather, it’s due to the rapid rise in management expenses and commission payouts, it noted.

SMA showed that for the period between 2016 and 2019, the estimated Average Payout Per Claim went down by 1% while the claim incidence rate for IPs grew only at a Compound Annual Growth Rate of 9%, which is comparable to the general Medishield Life’s corresponding rate of 10%.

However, during the same period, the growth in Management Expenses (56.6%) and Commission (50.4%) consumed by IP insurers have far outstripped that of Gross Claims (35.9%).

“This rapid rise in Management Expenses and Commission seems to be the key factor for the sector remaining unprofitable and unsustainable in the last few years,” SMA shared.

“To improve the long-term sustainability of the IP sector, the SMA Council is of the opinion that measures to reduce administrative and manpower costs in the IP sector be explored.”

Insurance companies stop disclosing remuneration of top executives

In its statement, SMA also urged the Ministry of Health (MOH) and the Monetary Authority of Singapore (MAS) to publish more data on individual IP insurers so as to help educate stakeholders and the public who are considering buying an IP.

This would help the public to take into considerations of, for examples, the management expenses and commission payouts incurred by insurance companies before deciding which IP insurer to go with.

SMA may have a point in demanding more transparency from IP insurers in disclosing non-health related items like management expenses, given that some IP insurers are unwilling to disclose them. In fact, it has been found that NTUC Income, Great Eastern Life and Prudential are some of these IP insurers not willing to reveal the salaries of their top executives.

In the case of NTUC, even though its own corporate governance guidelines recommend that the remuneration of at least the top 5 executives should be disclosed, NTUC Income has decided against it according to its latest annual report. It said it doesn’t want to disclose for “competitive” reasons.

For Great Eastern Life, despite the fact that MAS issued the “Code of Corporate Governance” in 2018, recommending that the remuneration of the top 5 executives of a public listed company be revealed to the public, Great Eastern Life did not follow. Again, it said in its latest annual report that “it is not a standard business practice to do so, having taken into account the highly competitive conditions for talent in the industry.”

Finally, for Prudential Singapore, it also does not want to disclose information with regard to the remuneration of its senior management staff. In addition, it does not want to disclose remuneration of its board of directors.

“We are of the view that the disadvantages to Prudential Singapore’s business interests would far outweigh the benefits of such disclosure, in view of the disparities in remuneration in the industry and the competitive pressures which are likely to result from such disclosure,” it said.

In any case, SMA says that it will continue to work with the relevant authorities and organizations to ensure that the interests of the public, IP policyholder, and IP patient are protected and best served.

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