Regulation of Careshield Life under Insurance Act to Protect Premiums Collected and Payouts Claimed
Ministry of HealthSpeakers
Summary
This question concerns Mr Kwek Hian Chuan Henry’s inquiry on whether CareShield Life is subject to the Insurance Act and how the Government ensures premiums are managed and payouts secured. Minister for Health Gan Kim Yong clarified that while CareShield Life is Government-administered, it follows MAS-aligned regulatory requirements, including the establishment of a dedicated Fund through new legislation. All premiums and investment returns will be used solely for policyholders, with the Fund’s financial accounts being audited annually and made public to ensure accountability. Additionally, an independent Council will be legislated to advise on scheme administration and recommend premium or payout adjustments based on an actuarially sound framework. These measures aim to safeguard the long-term sustainability of the Fund and ensure all monies are properly accounted for.
Transcript
82 Mr Kwek Hian Chuan Henry asked the Minister for Health (a) whether Careshield Life is subjected to the Insurance Act; and (b) if not, how will the Government ensure that the premiums collected are properly managed and payouts made available when claims arise.
Mr Gan Kim Yong: CareShield Life will not be subject to the Insurance Act as it will be administered by the Government.
However, the Government will ensure that CareShield Life is managed in line with relevant regulatory requirements that MAS sets for private insurance companies, including measures to ensure solvency. This is similar to how the MediShield Life scheme is managed today.
To ensure the proper governance of premiums collected for CareShield Life, the Government intends to enact new legislation for CareShield Life in 2019. The new CareShield Life legislation will provide for the setting up of a CareShield Life Fund. All CareShield Life premiums collected, along with any investment returns from these premiums, will remain entirely within the Fund. The Fund will be used solely for the benefit of policyholders. It will be audited annually and the financial accounts made public to ensure that all the monies are accounted for.
In addition, the Government also intends to legislate the setting up of an independent Council to provide advice on the administration of the CareShield Life scheme. The Council will regularly review and recommend changes in premiums and payouts, in accordance with an actuarially sound adjustment framework. If claims are higher than projected, the Council could recommend raising premiums or slowing down payout increases. Conversely, if claims are lower than expected, the Council could recommend payout increases, slower premium increases, or to return surpluses to policyholders as premium rebates. This legislated arrangement will help safeguard the long-term sustainability of the Fund.