Singapore insurers brace for 2026 as medical inflation climbs and IP rules tighten

[SINGAPORE] Medical inflation is expected to remain one of the most pressing challenges for Singapore’s insurance sector in 2026, say industry players and observers, as healthcare costs continue to outpace general inflation.

This pressure comes even as the Ministry of Health (MOH) prepares to roll out a new framework for Integrated Shield Plan (IP) riders aimed at curbing rising healthcare bills.

These riders are optional add-ons to IPs, which are private medical insurance plans providing extra coverage on top of MediShield Life, Singapore’s national health insurance scheme.

Chan Wai Kit, executive director at the Life Insurance Association, Singapore (LIA Singapore), told The Business Times that healthcare costs have been pushed up by more expensive medical equipment, treatments and labour.

With medical costs in Singapore expected to increase by 16.9 per cent in 2026, “consistent efforts” are key to ensure the sustainability of healthcare insurance in Singapore, he said, referencing a recent WTW global medical trends study.

Globally, medical costs are set to rise by 10.3 per cent in 2026 and by 14 per cent in the Asia-Pacific region.

However, medical inflation is not an issue that insurers can tackle alone, noted Lim Siang Thnia, insurance sector leader at Deloitte Southeast Asia.

This upward trend is expected to persist in 2026, added Sidharth Kachroo, chief health officer at Prudential Singapore, which is one of the major IP providers in Singapore.

“It is a complex issue driven by a number of factors including rising demand from an ageing population, higher costs for pharmaceuticals and consumables, advancement of medical technology and manpower costs,” he said. These factors, he noted, contribute to higher healthcare delivery costs, which in turn push up insurance premiums.

Collective efforts needed

The burden is further compounded by post-pandemic trends, including increased healthcare utilisation and a rise in claims, said Wong Sze Keed, chief executive officer at AIA Singapore.

Pearlyn Phau, Group CEO of Singlife, similarly noted that medical inflation continues to drive higher claims, particularly for IPs.

Chronic conditions such as cancer, diabetes and obesity are also expected to drive double-digit increases in medical costs in 2026, a Great Eastern spokesperson said, adding that recent regulatory updates reinforce the importance of co-payment and prudent use of healthcare services.

In response, Great Eastern introduced GREAT SupremeHealth P Prime, a new IP plan intended to provide more affordable access to private care.

This comes as more than 90 per cent of its customers are now opting for the restructured A and private partner plans, according to the spokesperson.

LIA’s Chan noted that MOH’s recent IP rider changes mark meaningful progress in addressing over-treatment and overconsumption, two key drivers of ballooning private healthcare bills.

IPs remain a “cornerstone” of health insurance coverage in Singapore, he added. In the first nine months of 2025, nearly 113,000 Singaporeans and permanent residents took up IPs, bringing the total coverage to about 71 per cent of all residents.

However, the revised framework could result in higher out-of-pocket expenses for some customers, even as premiums are expected to be lower, said Prudential’s Kachroo.

Premiums for new riders are expected to fall by about 30 per cent, translating to average annual savings of around S$600 for private-hospital IP rider policyholders and S$200 for those on public-hospital IP riders.

From Apr 1, 2026, riders under IPs will also be barred from covering the government-mandated deductible.

In light of these changes, Chan stressed that “collective efforts” by all stakeholders in the healthcare ecosystem – insurers, healthcare providers, consumers, and regulators – are needed to address medical inflation and premium changes sustainably.

Kachroo added that steps such as setting fee benchmarks and providing insurers with detailed hospital billing data could improve claims assessment and cost management.

Demographic pressure

Beyond rising costs, Singapore’s demographic shifts, particularly its rapidly ageing population, underpins much of the pressure on the insurance sector.

“With people living longer, often with chronic illnesses, there is increased pressure on healthcare infrastructure and a growing need for robust retirement and health solutions,” said AIA’s Wong.

Insurers are already responding to this shift.

“LIA is seeing that insurers are also introducing solutions to support the ageing population, such as expanded critical illness coverage and caregiving-focused solutions, designed to address the growing healthcare and long-term support needs of older Singaporeans and their families,” said Chan.

With life expectancy in Singapore reaching 83.5 years, this means “retirement planning now needs to account for at least 25 to 30 years post-work”, said a Great Eastern spokesperson.

However, critical gaps remain.

Citing the Singlife Financial Freedom Index 2024, Singlife’s Phau pointed out that only 38 per cent of Singaporeans have critical illness coverage, while many fall short in retirement savings.

As Singaporeans live longer, Kachroo highlighted that the likelihood of illness and medical treatment rises, with costs further driven by medical inflation.

Based on Prudential’s latest full-year data, the volume of claims increased by over 15 per cent from 2023 to 2024, alongside rising average bill sizes for claims.

Resilient industry

Despite the challenges, the insurance sector remains resilient.

The life insurance industry sector’s weighted new business premiums rose more than 10 per cent for the first three quarters of the year, compared with the same period last year, according to LIA.

This was driven by “steady demand for both protection and wealth solutions”, according to LIA’s Chan.

Looking ahead, Phau of Singlife expects moderate premium growth in 2026, supported by ongoing product innovation. But she warns that persistent medical inflation, regulatory changes, and global market volatility are key risks which could impact pricing and margins.

Meanwhile, consumer behavior is shifting, with more expected to be cautious next year.

“Customers will be highly sensitive to insurance costs, especially in health insurance,” said a Great Eastern spokesperson, adding that some may continue to prioritise insurance coverage for their cars, travel and homes over discretionary life insurance coverage.

Against this backdrop of heightened uncertainty, insurers are also bracing for a challenging macroeconomic environment. While AIA expects volatility to persist, it still sees “clear structural opportunities for growth”, said Wong.

Others point to investment risks as a key concern. Deloitte’s Lim noted that the “global macroeconomic uncertainty is likely to affect investment returns”, prompting insurers “to reassess their asset-liability management strategies to navigate the risks of a volatile market”.

Even so, longer-term demographic and wealth trends remain supportive. Wong expects “Singapore’s ageing population and the growing wealth across the region to continue to fuel strong demand for comprehensive wealth accumulation, protection and retirement solutions” in 2026.

To capture this demand, Lim said insurers will need to focus on “developing innovative products, particularly around wealth and retirement planning”. He added that this, together with the ability to provide the required advice, can be a key differentiator for insurers in the coming year.