Reasons and Factors – Rising Premiums for our Integrated Shield Plans
Reasons and Factors – Rising Premiums for our Integrated Shield Plan, and how does it affect us?
Many policy members receiving their Integrated Shield Plans policy renewal this year has been seeing increments in premiums.
There are several interconnected reasons why Integrated Shield Plans (ISPs) are experiencing steep premium increments in Singapore in 2025:
- MediShield Life Enhancements (Effective April 2025):
- Increased Coverage and Claim Limits: MediShield Life, the basic national health insurance scheme, has undergone a comprehensive review, leading to significantly enhanced coverage and higher claim limits across various areas (e.g., daily ward limits, annual claim limits, outpatient treatments, high-cost therapies).
- “Knock-on” Effect on IPs: Since ISPs are built on top of MediShield Life, an increase in MediShield Life’s coverage means the base component of the ISP premium (the MediShield Life portion) will increase. While ISPs provide coverage beyond MediShield Life, the fundamental uplift in the national scheme meant adjustments in the overall premium structure.
- Increased Inpatient Deductible: To help manage the overall premium increases for MediShield Life, the inpatient deductible is also increasing. This can indirectly influence the private component of ISPs as well.
- Rising Healthcare Costs (Medical Inflation):
- General Inflation: Singapore, like many other countries, is experiencing significant medical inflation. This refers to the rate at which medical costs (e.g., doctors’ fees, hospital charges, cost of drugs, medical technology, staff salaries) are rising. Projections indicate medical insurance costs in Singapore could rise by 12% in 2025.
- Advanced Medical Technology and Treatments: Innovations in medical technology and the availability of new, often more expensive, treatments and diagnostic tools contribute to higher healthcare costs. While these advancements improve patient outcomes, they come at a higher price.
- Increased Utilisation of Healthcare Services: With an aging population and increased awareness, there’s a higher demand for and frequency of healthcare claims. This higher utilization directly impacts insurers’ payout obligations.
- Over-consumption/Over-servicing: Some sources suggest that “overly generous” insurance policies (especially those with very low out-of-pocket expenses for policyholders through riders) can lead to higher and even excessive consumption of medical services, which drives up overall healthcare costs for everyone.
- Insurers’ Commercial and Actuarial Considerations:
- Claims Experience: Insurers adjust premiums based on their claims experience. There have been reports of significant increases in overall IP claims costs in the first half of 2024 compared to the previous year.
- “Premium Freeze” Lifted: The Life Insurance Association (LIA) had previously implemented a “premium freeze” for some IP plans, which ended on August 31, 2024. With this freeze lifted, insurers have adjusted their premiums to reflect the actual cost trends and claims.
- Age-related Increases: As policyholders age, the likelihood of needing medical care increases, naturally leading to higher premiums in older age bands.
- Riders: While riders provide additional benefits (often reducing out-of-pocket expenses to 5% or a low cap), they have also been identified as a significant driver of rising healthcare costs and, consequently, steeper premium increases.
In essence, the steep premium increments for ISPs in 2025 are a confluence of necessary adjustments to the base MediShield Life scheme, the escalating cost of healthcare services due to inflation and medical advancements, and insurers’ need to manage claims and maintain financial viability.
There are certainly ways to manage the premiums increments, such as changing and downgrade our plans benefit, however, this would mean compromising and lowering benefits in exchange for certain reduction in premiums. I discuss downgrading of medical plans in this article (link HERE).
For those who have allowance on budget, it is crucial to see if you can ride thorough these phases of premiums adjustments – until we see any positive drivers and change implementation from governmental agencies pushing for sustainability and affordability.
Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek unbiased financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
Published By:
Judy Lang
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