20 May, 2015
Introduction
The Monetary Authority of Singapore has released a consultation paper on its proposed revisions to the regulatory framework for accident and health (“A&H”) insurance. These revisions deal mainly with the governing of Medisave-approved Integrated Shield Plans (“IPs”).
IPs are hospital insurance plans that comprise a basic Medishield portion as well as an additional private insurance coverage portion. Since their introduction in 2005, IPs have become increasingly popular, and now cover around 60% of Singapore Citizens and Permanent Residents.
However, there have been concerns raised over policyholders’ negative experiences with their IPs and the insurers or intermediaries marketing them. The proposed changes thus aim to address these issues by:
(i) Enhancing disclosure requirements;
(ii) Strengthening protection measures for policyholders; and
(iii) Improving the quality of conduct of intermediaries selling A&H insurance.
Enhancing Disclosure Requirements
Under the proposed amendments, the disclosure requirements over IPs will be enhanced.
(i) The consultation paper has set out a series of standardised disclosures for the various IP disclosure documents.
(ii) Insurers must include a statement in the Acceptance Letter to clarify that acceptance does not constitute the start of policy coverage, and must indicate the policy inception date.
The enhanced disclosure requirements also extend to cover other A&H policies.
(i) Certain stardardised disclosures have been extended to cover all individual medical expense policies, such as the statement that coverage under MediShield Life continues even if the policy is not taken up or renewed.
(ii) Insurers must set out clearly in the Product Summary for non Medisave-approved products that the premium is not payable using Medisave.
(iii) For short-term A&H policies, insurers must disclose that the plans are not guaranteed renewable, and that the policyholder may be subject to additional underwriting at renewal.
It may be noted that the above enhanced disclosure requirements all involve the use of standardised disclosure statements. These may be found in Appendix A – D of the consultation paper. Insurers should be aware of the contents of these disclosure statements so as to be able to properly include them in the necessary documents should the proposed changes come into effect.
Finally, the consultation paper proposes bringing in line the disclosure requirements for A&H policies with the requirements under the Financial Advisors Act. This involves an annual review of documents given to the insured as well as additional disclosures on the part of both insurers and intermediaries.
Insurers should thus note that a review of their insurance documents, as well as their internal practices regarding the review of documents, may be required should the changes come into force.
Strengthening Protection Measures
Currently, insurers are required to provide a free look period of 14 days for a life or A&H policy. Under the proposed amendments, insurers will be given the flexibility to offer a longer free look period. However, the minimum period of 14 days must still be complied with.
Improving Conduct Of Intermediaries
It has been recognised that, apart from insurers and agents, the conduct of insurance intermediaries has great bearing on policyholders, and should thus be similarly regulated. To that end, the proposed amendments impose certain training requirements on insurers.
(i) Insurers will be responsible for the training, competency and conduct of its intermediaries.
(ii) Insurers must ensure that its telemarketers, including those of its intermediaries, follow a script approved by the insurer for all long-term A&H policies.
Intermediaries themselves must of course conform to a greater standard of regulation.
(i) A&H insurance intermediaries selling IPs are required to undergo a minimum 2 hours of training pertaining to MediShield Life and IP content annually.
(ii) Intermediaries may only use marketing material approved by the insurers for IPs.
(iii) Intermediaries must collect and document information relating to the policyholder’s financial commitment and affordability considerations, as well as ward preference.
Insurers will have to take note of the enhanced training requirements so as to organize the necessary sessions for its intermediaries and telemarketers. Insurers may also consider imposing their own enhanced conduct regulations over their intermediaries as they may be held responsible for any misconduct on their part.
Concluding Words
The proposed amendments to A&H insurance regulations seek to provide greater protection and address the concerns of policyholders. The changes impose a fair number of additional disclosure requirements on insurers, as well as a certain degree of responsibility over their intermediaries.
The Monetary Authority of Singapore aims to put the proposed amendments into effect by the 4th quarter of 2015. The full consultation paper may be found at this link.
Parties should feel free to send their feedback on the consultation paper by 12 June 2015 to:
Insurance Department
Monetary Authority of Singapore
10 Shenton Way
MAS Building
Singapore 079117
Fax: (65) 6229 9694
Email: healthpc2015@mas.gov.sg
For further information, please contact:
Simon Goh, Partner, Rajah & Tann
simon.goh@rajahtann.com
Ying Shuang Wang, Partner, Rajah & Tann
ying.shuang.wang@rajahtann.com
