Yearly Loss Ratio of MediShield Life (Basic) in Last Five Years

15 October 2020

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Name and Constituency of Member of Parliament
Mr Gerald Giam Yean Song
MP for Aljunied GRC

Question No. 160

To ask the Minister for Health in each of the last five years, what has been the loss ratio of MediShield Life (Basic).

Written Answer

MediShield Life is a not-for-profit, universal scheme, that provides Singaporeans with basic lifelong protection against large healthcare bills. All premiums are placed in the MediShield Life Fund and are used solely for the benefit of policyholders and in the administration of the scheme.

The MediShield Life Fund is designed to be self-sustaining and should therefore be based on sound actuarial principles. Therefore, premiums collected have to cover potential current and future claims, including amounts set aside to support future payout commitments such as continuing claims for long-term treatments, as well as provide a buffer against unforeseen contingencies such as unexpected spikes in hospitalisations. In addition, part of the premiums paid by policyholders during their working ages are set aside to provide for future premium rebates. This will help to moderate premium increases in their older ages, and helps to distribute premiums more evenly throughout the policyholders’ lifetimes.

The Incurred Loss Ratio (ILR) compares the total premiums collected to the total monies required to ensure that the Fund is able to meet current claims and future commitments. This is a more accurate representation of the adequacy of premium collection compared to the Loss Ratio, which compares the total premiums collected with only the total claims paid in the same year, but omits a large part of what premiums are committed to support, such as future premium rebates and continuing claims for long-term treatments. For example, dialysis patients are expected to require treatment over a prolonged period or for life, and the Fund needs to support these future claims.

Table 1 below shows the premiums collected, claims paid, change in required reserves and the ILR of the MediShield Life Fund since the launch of scheme in November 2015.

Table 1: Incurred Loss Ratio of MediShield Life

Table caption

Year	Premiums Collected [A]	Claims Paid [B]	Change in Required Reserves^# [C]	Incurred Loss Ratio ([B] + [C] / [A])
2016	$1,859m	$745m	$1,182m	104%
2017	$1,882m	$836m	$969m	96%
2018	$1,914m	$922m	$998m	100%
2019	$1,923m	$1,030m	$1,166m	114%
2016 -2019	$7,578m*	$3,533m	$4,314m	104%

# Note: The change in required reserves reflects the amounts that need to be set aside to support future commitments, such as long-term treatments and future premium rebates.
* Note: This $7.5 billion comprised $4.4 billion in premiums collected from policyholders and $3.1 billion in premium subsidies and other forms of premium support from the Government to help keep premiums affordable.