Non-Constituency Member of Parliament Gerald Giam said in Parliament on 27 May:
"The MediShield Fund
had a capital adequacy ratio of 161 per cent in 2012, which is more
than 40 per cent higher than what the Monetary Authority of Singapore
expects commercial insurance funds to hold. MediShield's loss ratio
averaged just 63 per cent from 2001 to 2012. This means that it is
collecting a lot more in premiums than it is paying out in claims."
Hospitalisation insurance such as MediShield (and its successor MediShield Life) should operate on the basis of pooling risks for the current, or at most two, financial years.
MediShield should not be collecting premiums far in excess of claims year after year.
If MediShield's capital is found inadequate because of a widespread outbreak of an infectious disease such as SARS or MERS, the Government should provide temporary financial support; MediShield can adjust premiums upwards subsequently to rebuild its capital and repay the Government.
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