SINGAPORE — Demand for private health insurance products will still remain strong after the Government implements MediShield Life by the end of next year and industry operators will continue to play a key role in providing Singaporeans with healthcare options.

This is the view of AIA Singapore chief executive Tan Hak Leh, who believes that private insurance plans will not be replaced by an enhanced MediShield scheme.

“How the new scheme will impact the industry is far from clear at this point but, fundamentally, MediShield Life is about basic plans that cover for medical costs for B2 wards and below. I believe the demand for benefits beyond that basic cover is likely to remain strong,” he told TODAY yesterday.

While MediShield Life is designed based on the cost structure of B2 and C wards, patients will still be able to claim for hospital stays in A or B1 wards as well as private hospitals, although these amounts will be small relative to the bill, Health Minister Gan Kim Yong said earlier this month in a move to clear misperceptions among some of the public.

With the Government looking to provide new benefits such as life-long coverage for pre-existing conditions via MediShield Life, changes in costs and structures are expected for private insurance products, particularly the Integrated Shield Plans (IPs).

Provided by AIA and four other insurers, IPs combine the basic MediShield scheme and a top-up portion that also covers B1 and A wards in public and private hospitals. Some 60 per cent of Singaporeans have bought IPs and AIA has over half-a-million IP holders, Mr Tan said.

“We expect IPs to remain a relevant product and the industry ... has pledged to not increase premiums for IPs for at least a year after MediShield Life is launched,” Mr Tan said. “But how IP as a business will grow for us going forward will depend on market conditions such as population growth. Right now, it’s already quite well-penetrated.”

AIA announced its results for the six months ended May 31. In Singapore, the period saw a 46 per cent on-year increase in annualised new premiums, reflecting the underlying demand that AIA will continue to enjoy, Mr Tan noted. “That demand is not just for health and medical protection — increasingly, the market is becoming more aware of the need for retirement savings plans. That’s why savings products were a key growth driver for us in the past half year, while our core protection business also performed well.”

In the same period, AIA Singapore recorded an 11 per cent on-year growth in operating profit after tax, from US$183 million (S$227 million) to US$203 million, but new business margin declined from 74.8 per cent to 59.3 per cent. The thinning margin comes as the financial advisory industry faces a more demanding operating environment, with the Monetary Authority of Singapore looking to implement more control on the industry’s practices and agents.

Meanwhile, AIA’s group value of new business shot up to a record US$792 million in the past half year and CEO Mark Tucker remains upbeat about outlook in the region. “The Asia-Pacific offers one of the most attractive and resilient life insurance markets in the world,” he said. “A young and upwardly mobile population is driving rapid urbanisation and significant growth in disposable incomes across the region.”