Not the ‘right solution’ to mandate full portability for IP insurance: Minister of State Rahayu
Calls for IP portability mainly come from policyholders who are unhappy with changes in coverage terms, facing claim difficulties, or struggling to afford premiums
THE Health Ministry does not see mandating full portability for Integrated Shield Plans (IPs) as a suitable solution for policyholders, said Minister of State for Health Rahayu Mahzam in Parliament on Tuesday (Nov 12).
She was responding to a question from Jurong GRC Member of Parliament Tan Wu Meng, who requested updates on the ministry’s study regarding the feasibility of making IP insurance portable.
Portability would allow IP policyholders to switch insurers without undergoing new underwriting assessments.
Rahayu cited two main reasons behind the ministry’s stance. First, she said, full portability is “not an international best practice” for supplementary and commercial health insurance.
Second, in countries where full portability between private insurers exists, compensation mechanisms must be implemented.
“In other words, for insurance company A to take over from insurance company B a policyholder with a pre-existing condition and of higher risk, A will receive compensation from B,” Rahayu explained.
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Countries that enable this kind of portability typically establish a risk equalisation fund, funded by public resources and insurer contributions, with a neutral body handling transfer payments between insurers.
Setting up and managing such a fund would require significant national resources, Rahayu said.
In her response, she noted that calls for IP portability mainly come from three groups of policyholders: those unhappy with changes in coverage terms, those facing claim difficulties, and those struggling to afford premiums as they age.
But for IP policyholders with pre-existing conditions, the issue may lie not in limited competition among insurers, but in insurers’ reluctance to compete for high-risk customers, whose claims are likely to exceed premium income, she said.
“For IP policyholders with pre-existing conditions, the assurance for them is that (the) government always steps in to ensure that MediShield Life will cover them for their pre-existing conditions, even if their private insurance does not,” she added.
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