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Singapore – Review of Accident And Health Insurance Regulatory Framework.

6 July, 2015

 

The Monetary Authority of Singapore (“MAS”) issued a Consultation Paper for the Review of Accident and Health Regulatory Framework (“Consultation Paper”). It proposes changes to the regulatory framework for accident and health (“A&H”) insurance to take into account, among other things, the introduction of Medisave-approved Integrated Shield Plans (“Integrated Plans”) and the recommendations of the MediShield Life Review Committee (“MLRC”). The MAS is targeting to effect the amendments by the last quarterof 2015. The table below draws your attention to some of the proposals made in the Consultation Paper.

 

  Integrated Plans Other A&H Policies
Name of Policy The MLRC noted feedback from the public that consumers were not aware of what their Integrated Plans covered and the distinction between MediShield and Integrated Plans. 

To avoid confusion, the MAS is proposing to restrict the use of the term “Shield”:

 

  • The term “Shield” may not be used in the naming of A&H products that are not Medisave-approved and launched after 1 November 2015.
  • For existing A&H products that are not Medisave-approved, including Integrated Plan riders, insurers will be given a two-year transition period from 1 November 2015 to effect the change.
Enhanced Disclosure Requirements The MAS also noted complaints that many policyholders were unaware of the risks of upgrading or switching their policies. 

Some of the additional disclosures required are as follows:

 

  • The distinction between premiums payable to MediShield Life and the additional private insurance coverage;
  • The distinction between claims paid out from MediShield Life and the additional private insurance coverage;
  • The risks and limitations of upgrading or switching;
  • The option for policyholders to downgrade their existing Integrated Plan policies should the premiums become unaffordable; and
  • The applicable free look and reinstatement period for Integrated Plans.
For long-term A&H policies, A&H insurance intermediaries must disclose: 

  • Information on their remuneration upfront; and
  • any applicable switching fee or charge, in writing.

 

Additional disclosures will be required on:

 

  • the free look period of A&H policies;
  • termination or claim; and
  • warnings, exclusions, and disclaimers.
Standardised Disclosures Due to the concerns stated above, the MAS will require insurers to adopt standardised disclosures including the following: 

  • Premium Notification Letter as required under the Ministry of Health’s Conditions;
  • Benefit Schedule Table in the Product Summary; and
  • Breakdown of Premiums Payable for MediShield Life and the additional private insurance coverage in the Acceptance Letter and Conditional Letter of Offer.
The MAS had noted from complaints received from policyholders that they may not be fully aware that insurers can unilaterally terminate short-term A&H policies. 

The MAS will require a standardised disclosure statement in the Product Summary and Premium Notification Letter for shortterm A&H policies that the plans are not guaranteed renewable and that the policyholder may be subject to additional underwriting at renewal.

Statements on the following to be made in the following documents: 

  • Statement in the Conditional Letter of Offer stating that the policyholder would continue to be covered under MediShield Life should they decide not to take up the insurance offered; and
  • Statement in the Termination Letter stating that the policyholder would continue to be covered under MediShield Life.
Review of Documents Insurance intermediaries are expected to review the documents given to the insured at least annually.
Free Look Period Insurers will be allowed to offer a free look period that is longer than 14 days, which is the current prescribed free look period.
Collection of Information To assist the better assessment of a client’s needs, A&H insurance intermediaries must: 

  • Collect and document information relating to the policyholder’s financial commitment and affordability consideration; and
  • Enquire on the policyholder’s preference for wards for hospital stays. Intermediaries should clearly explain to policyholders the costs associated with different ward classes and the corresponding subsidy levels.
Marketing Insurance intermediaries may use only marketing materials approved by the insurer for the Integrated Plans. For all long-term A&H policies: 

  • An insurer must ensure that its telemarketers, including those of its intermediaries, follow a script approved by the insurer.
  • The script must include a statement that the A&H insurance intermediary is calling to provide information and not to advise or conclude sales for all long-term A&H policies.
Training A&H insurance intermediaries selling Integrated Plans must undergo a minimum two hours of training pertaining to MediShield Life and Integrated Plans content annually
Conduct and Competency An insurer is responsible for the training, competency, and conduct of intermediaries, regardless whether these intermediaries are tied-agents or otherwise, selling its A&H policies.

 

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For further information, please contact:

 

Choon Yuen Hui, Partner, WongPartnership

choonyuen.hui@wongpartnership.com

 

Homegrown Insurance & Reinsurance Law Firms in Singapore 

 

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