Singapore is facing a projected record high of 16.9 percent medical cost inflation in 2026, prompting the Life Insurance Association Singapore (LIA) to call for collaborative efforts to address overconsumption of healthcare services and rising treatment costs.
New Insurance Riders Aim to Curb Rising Healthcare Costs
The LIA emphasized the need for collaboration between insurers, healthcare professionals and providers, consumers, and authorities. All seven Integrated Shield Plan (IP) insurers are required to launch new riders by April 1 to meet requirements set by the Ministry of Health (MOH).
These new riders will require consumers to pay a larger portion of healthcare costs out-of-pocket before insurance coverage begins, aiming to share the responsibility of containing rising costs, according to LIA executive director Chan Wai Kit.
Based on initial responses from four IP insurers, the new riders are expected to be priced at least 30 percent lower than existing options, with one insurer offering premium reductions of up to 84 percent. However, LIA president Ms. Wong Sze Keed cautioned that the impact on sustainable healthcare remains to be seen.
Coverage and Affordability Considerations
Chan Wai Kit noted that lower premiums may correlate with differing coverage levels. “If the expectations are not aligned, then you are going to hit the other problem down the road, which is ‘I thought I had this (covered) but actually, because of my decision earlier, I don’t,’” he said.
Wong, who is also the CEO of AIA Singapore, stressed the importance of understanding what a rider covers, even when affordability is a concern. “Fundamentally, even if you think that affordability is an issue, you should also know what (a rider) covers… I think that process is very critical.”
MOH Mandates Higher Deductibles and Co-Payments
To address rising premiums and private healthcare costs, the MOH has mandated that new IP riders sold from April 1 cannot cover the minimum IP deductibles set by the ministry. This means policyholders with new riders will be required to pay at least $1,500 before insurance coverage kicks in.
Additionally, the co-payment cap will be doubled from $3,000 to $6,000, requiring policyholders to contribute a larger share of their medical bills.
Global and Regional Trends in Medical Inflation
Globally, medical costs are projected to continue rising in 2026, with the Asia-Pacific region expected to see the highest increase at 14 percent, according to a November 2025 report by WTW. Singapore is anticipated to surpass Indonesia as the Asia-Pacific market with the highest medical inflation, reaching 16.9 percent.
Medical inflation in Singapore was under 10 percent until 2024, rising to 12.3 percent in 2024 and 15.5 percent in 2025. Factors contributing to this increase include an aging population, the adoption of costly new technologies and treatments, and high operating expenses due to rising real estate prices and healthcare staff shortages.
The Global Asia Insurance Partnership (GAIP) reports that the health protection gap in Asia – the difference between healthcare costs and available financial resources – is now the largest protection gap in the region.
GAIP CEO Min Hung Cheng stated that the discussion in Singapore extends beyond medical inflation to encompass broader healthcare cost trends, including utilization and delivery of care, and their impact on long-term affordability. GAIP will release a research paper on healthcare affordability and insurance sustainability on April 7.
The LIA management committee has prioritized collaboration with stakeholders, enhancing public education on wealth and health protection, and launching financial literacy workshops for students at institutes of higher learning, in partnership with the Singapore College of Insurance. Interactive workshops will begin in April at ITE College Central and Republic Polytechnic, with plans to expand the program to other institutions.
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