Why did it take 15 years to get revelationary ElderShield statistics?

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$2.6b in premiums, $100m in claims

I refer to the article “Gan Kim Yong: $2.6 billion collected in premiums for ElderShield insurance and around $100 million paid out in claims since 2002” (theonlinecitizen, Feb 18).

It states that “from 2002 to end-2015, about $2.6 billion have been collected in premiums for ElderShield insurance and around $100 million have been paid out in claims, adding that about $130 million in premium rebates have been given to policyholders so far, the first tranche in 2007 and another in 2012.

This is is his response to questions filed by NCMP Assoc Prof Daniel Goh Pei Siong who asked the Minister for Health since the inception of ElderShield in 2002 what has been the total ElderShield premiums paid, what is the total surplus collected by the ElderShield insurers, what is the total surplus returned to members as premium rebates, and what is the payout ratio and profit margin of each of the ElderShield insurers.”

15 years to get revelationary statistics?

Don’t you find it kind of funny that it took about 15 years for the right question to be asked in Parliament, in order to get such revelationary statistics?

The people have been asking?

In this connection, people have been asking about the ElderShield scheme for many years.

For example, you may like to read some of the following:

… “ElderShield may be made mandatory? Claims, premiums?” (Jan 12, 2017)

“ElderShield: $90m claims, $3b premiums & accumulated interest?”” (Dec 20, 2016)

“ElderShield: Claims ratio?” (Oct 7, 2016)

“ElderShield: $90m claims since 2002 – premiums collected?” (Apr 5, 2016)

“Govt still not spending money on healthcare” (Mar 2, 2014)

“ElderShield misconceptions cleared” (Straits Times, May 2, 2007)

… “ElderShield increased to $400” (Jul, 2005)

Why the need to have so much surplus?

As to “Mr Gan said that people who are not familiar with how ElderShield works may ask why the current amount of premiums collected is much higher than the amount of claims paid out so far.  Some may even wrongly conclude that policyholders have been paying too much in premiums or that insurers have made excessive profits.

“Allow me to clarify the facts to address these misperceptions,” he said.

The Minister said that there are insurance schemes that provide coverage for the year in which the policyholder pays his premiums – when the policyholder stops paying premiums, the coverage ends.  ElderShield works differently.  It collects premiums while the policyholder is aged 40 to 65, and provides lifetime coverage from age 40, even after the policyholder reaches 65 and stops paying premiums.

Hence, he said that it is prudent for the total amount of premiums collected to exceed the amount of claims paid while our policyholders are still young, because the premiums collected are meant to provide coverage against future claims throughout the policyholder’s lifetime.

Trend of increasing claims? 

As explained earlier, Mr Gan said that the proportion of claims over premiums collected has been increasing since 2002 and this trend can be expected to continue as the profile of policyholders gets older over time.

What about accumulated interest?

“If the insurers do not collect enough premiums today and set aside some amounts for future claims, there is a risk that ElderShield will not be able to provide adequate coverage for policyholders as our population ages.  It is important for insurers to ensure that policyholders will not face this situation,” he said” – what is the accumulated interest (investment returns) on the excess premiums over the last 14 years? Will it increase the total excess premiums accumulated to over $3 billion?

When will annual claims exceed premiums?

Also, when do we project that the current trend of premiums exceeding claims every year to end? In a few decades or longer – given that the ElderShield scheme is compulsory (opt-out allowed) and that the population may keep increasing, like in the past (so far in Singapore’s history)?

Claims ratio for last year?

For example, what was the claims to premiums ratio for say the last year?

Not spending a single cent?

When will the Government start to allocate some of the Budget into ElderShield, as it does not cost the Government any money now?

Got other revelationary statistics?

Finally, are there other revelationary statistics on other matters, other than ElderShield too?

Leong Sze Hian

About the Author

Leong
Leong Sze Hian has served as president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), invited to speak more than 200 times in over 30 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of Indonesia and Brunei. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.