Insurers’ CI Portfolios are Under Pressure

For an insurer’s critical illness portfolio to be viable, it has to be backed by assets.  These assets are invested out to diversify that risk, and create an income stream to cover the cost of claims.  Because of medical inflation, and the rising claims, premiums have not kept pace with payouts for insurers.  Some of them have portfolios with negative returns.  Despite this, Singapore’s robust regulatory framework ensures that there is little to no chance of insurer default.  Even if that were to happen, there is a mechanism to address the needs of claimants. 

What this does mean is that premiums are expected to rise.  Most critical illness policies do not guarantee level riders, so there is a mechanism for insurers to manage costs.  We are seeing new products on the market which are more targetted, and with higher entry premiums.  Due to the ageing population, insurance is a need.  The average Singaporean will live long enough to get a critical illness.