Updated: Oct 29, 2021
Medical inflation among reasons for rise; businesses more exposed to virus hit harder
Businesses are now forking out higher premiums for some insurance policies, with those more exposed to the pandemic bearing the brunt of the impact.
Insurers told The Straits Times that premiums for several business insurance plans have risen due to Covid-19 risks, private hospital usage and medical inflation.
Great Eastern said the premiums for certain classes of insurance have risen by up to 30 per cent, or these policies might have had a reduced sum insured and limit of liability. These include work injury compensation, public liability and professional indemnity.
"Industries most impacted are those whose employees have higher exposure to Covid-19, for example, where employees have interaction with people serving SHN (stay-home notice) or quarantine," it added. Some examples could include firms in the hospitality and construction sectors.
An Aviva spokesman said premiums for business insurance have been rising, with the group health portfolio accounting for most of the increase.
"With medical inflation and overconsumption, healthcare costs have been rising, which impacted the underwriting performance of the portfolio as the amount of claims paid out exceeds the amount that we have priced for."
AIA Singapore said insurance premiums for employee benefits rose by 5 per cent to 10 per cent last month compared with January last year, driven by private hospital utilisation and medical inflation.
The extent of the increase is difficult to generalise across industries as it depends on the coverage purchased by each company, added AIA, which has 1.2 million workers on employee benefits insurance plans through their employers.
Ms Susan Ong, NTUC Income's general manager for corporate business, said the rise in premiums for group employee benefits was even last year across various industries, with more employers keen to add Covid-19 benefits to coverage for staff.
The price hike could add to the woes of companies that are still trying to regain their footing amid the economic downturn.
Mr Kenneth Loo, executive director and chief operating officer of Straits Construction, said premiums have "gone up quite significantly" in the construction sector.
"In general, there are a lot of performance bonds and other insurance that firms take on as part of their processes. The perception of the risk factor is high because with borders closed, there are not enough workers in the market."
Mr Loo has observed that many small and medium-sized enterprises in the construction sector face difficulty proceeding with their projects "as they are unable to afford the higher premiums arising from a greater perceived risk of default".
Apart from premiums, the pandemic has also changed the way insurers are doing business.
Most already provide Covid-19 support through measures such as relief funds, coverage and cash benefits for hospitalisation due to the virus and vaccination side effects.