One in four SIngaporeans lack critical illness (CI) coverage, according to a new report.
Irma Hadikusuma, chief marketing and proposition officer at AIA Singapore, highlighted Singaporeans’ price sensitivity and value consciousness when considering insurance premiums.
“Of those who indicated that their family member had faced a critical illness, 25% indicated that they lacked a CI plan to rely on,” said Hadikusuma.
New data from the Life Insurance Association of Singapore (LIA) shows that, despite the narrowing of the CI protection gap to 74% in 2022 from 81% in 2017, a significant number of Singaporeans still lack adequate CI coverage.
“Second to affordability, desiring maximum coverage is a common theme among respondents — we found that they significantly underestimate the necessary amount of CI coverage required,” said Hadikusuma.
LIA said economically active (EA) Singaporeans and permanent residents, including platform workers (PWs), face a mortality protection gap of $373 billion and a CI gap of $579 billion. While EA individuals have improved their mortality protection needs to cover approximately 79% of their requirements, the mortality protection gap has only slightly decreased to 21% since 2017.
On average, each policyholder now benefits from mortality coverage of around $331,200 and CI coverage of approximately $193,300 in 2022. Despite a 63% increase in CI coverage since 2017, one-third of respondents still lack sufficient CI coverage, particularly among the younger demographic.
Striking a balance between affordable premiums and adequate coverage remains a significant challenge for insurers, according to a Precedence Research report. Dennis Tan, president of LIA Singapore, acknowledges progress made since 2017 but notes evident gaps in the insurance landscape, particularly in serving vulnerable populations like PWs, who face a significant 91% protection gap.
Looking ahead, Hadikusuma expects insurers to prioritize comprehensive yet affordable plans like AIA UCC to encourage more Singaporeans to obtain adequate CI coverage. The CI insurance market is experiencing rapid expansion, driven by increased awareness of health-related risks, particularly among the rising middle class, and digitization efforts by insurers.
“Whilst we are unable to make conclusive judgments about the future, we are hopeful that the introduction of affordable, yet comprehensive and flexible plans like AIA UCC, alongside continuous efforts to raise awareness and educate consumers, will encourage more Singaporeans to get themselves better protected with adequate CI coverage,” Hadikusuma told Singapore Business Review.
Regulatory developments aimed at promoting insurance penetration and consumer protection are shaping the market landscape, with projections indicating a significant compound annual growth rate (CAGR) for the global CI market. If driven along the projected path, the global CI market’s CAGR from 2023 to 2032 could reach 7.5%, according to Precedence Research’s report. The Business Research Company forecasts a CAGR of 15.2% in 2024, with continued growth expected in subsequent years.
Have something to say about this story? Leave a comment below.
