Monetary Auth of Singapore How to make private insurance good for the people
Private insurance can be good and can be bad for the people.

This is how to tell the difference.

Private insurance is bad when it is:

a) Run to make the maximum profit for the insurance company.
b) Not properly supervised by the government
c) Results in many rejected claims and disputes

Private insurance is good when it is:

a) Takes over a risk that cannot be managed well by the consumers
b) Is run efficiently to lower the cost to the consumers
c) Used to meet individual needs and not social needs mandated by the government.

The social needs, such as basic health insurance, should be run by social insurance, rather than private insurance.

Some people have the mistaken belief that private insurance is good because it allows for competition to bring down the cost. This is a fallacy. If an insurance company charges an inadequate premium rate, it is likely to abuse its power to reject legitimate claims. The consumers do not have the financial means to challenge these rejections. 

For private insurance to operate properly and provide a good service to the consumers, it is necessary to have a system to ensure the fair settlement of claims. This requires claim coverage to be clearly worded and an independent body to arbitrate on disputed claims.

MAS -are you listening?

Tan Kin Lian



 

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