How Insurance Companies Are Exposed To Singapore’s Healthcare Market

Singapore has an ageing population. In 2015, one in eight Singaporeans were aged 65 and above. In 15 years’ time, the ratio is estimated to grow to one in four, according to government statistics.

Studies have also shown that each elderly Singaporean will spend an estimated average of US$37,427 on healthcare in 2030, which is a hefty 357% increase from the US$8,196 spent in 2015.

Meanwhile, per capita government spending on healthcare in Singapore has grown at a compound annual rate of 15.7% from 2010 to 2015. The government has also projected its healthcare spending to grow to S$13 billion in 2020, up from S$9 billion in 2015.

So, there are clearly many studies that forecast growth for Singapore’s medical industry.

Besides healthcare services providers, there are other types of companies that have exposure to the medical industry in Singapore, and that’s none other than providers of insurance products.

In Singapore, the Medishield Life healthcare insurance system run by the government can be combined with private sector healthcare insurance. In Singapore’s stock market, one company providing private sector healthcare insurance products is Great Eastern Holding Limited (SGX: G07).

Right now, Great Eastern is also one of the three private sector insurers that are managing ElderShield, a healthcare insurance scheme set up by the government that caters to the elderly in Singapore. But, there have been calls for the ElderShield scheme to be revamped – one of the proposals is for the Central Provident Fund to manage the scheme, instead of the three private sector insurers.

As Singapore’s population ages and grows, Great Eastern could see more insurance business. But, it’s unclear whether the premiums involved would see Great Eastern be adequately compensated for the risks it has to take.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat does not own shares in any companies mentioned.