Is claims-based pricing for Shield riders a double-edged sword?
A discount proffers degree of equity for healthy policyholders but eventually riders, for which premiums must be paid by cash, may simply become unaffordable
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YOU'VE heard of "no-claim discount'' (NCD) in motor insurance, but probably not so much in the context of health insurance.
Policyholders of Integrated Shield (IP) plans, which comprise around 70 per cent of Singapore residents, will have to brace themselves. No-claim discounts - or in insurance industry parlance, "claims-based pricing" - are shaping up to be the latest lever in insurers' efforts to wrest their IP portfolios into the black.
Prudential pioneered claims-based pricing in 2017 for its private hospital insurance rider. Its results turned around dramatically in 2018 and 2019, after losses in previous years. In April this year, AIA and Great Eastern will launch claims-based pricing. Aviva says it will do so in 2022. Income says it is "closely monitoring" the model.
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