NTUC Income has begun informing policyholders on private integrated enhanced shield policies ("IP") that they will soon have to co-pay part of their bills when their policies are renewed starting from April 2021. As a matter of fact, four other insurers (Aviva, Prudential etc) having IPs with such riders say that they are moving policyholders to co-payment riders, or considering doing so.
From 2018 to 2020, cost of IP has increased by almost 40% as policy holders on such full coverage riders plans have been overconsuming medical services and doctors have been over-charging according to the Ministry of Health ("MOH"). I reckon that the mindset of many such policy holders and private doctors are that it is ok to do so as "rich insurance companies" are picking up the tab. Such ugly behaviors lead to free riding on other policy holders who have to pay exorbitant yearly increase in hospitalization and medical premiums.
With the revert back to co-payment for policy holders on previously full paying riders, the insurers in return will reduce the premiums. NTUC Income will reduce its insurance premiums by up to 50%.
Such flip flop by the insurance companies do not look good on them. MOH also should never have allow the private insurers to do away with the co-payment concept in the first place. Economics theory (as well as basic common sense) have all along states that giving products and services free will lead to over-consumption. Churning out new products to grab market share at the expense of rationality has led to losses in offering IP and an unsustainable spiraling rise in premiums. In short, the insurance companies will be perpetually chasing after their own tails due to this ugly creature that they themselves have created hence they now need to extract themselves out of this mess.
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