(Delivered in Parliament on 29 February 2016)
Introduction
Mdm Speaker,
The benefits of the Home Protection Scheme (HPS) struck close to home when I lost an uncle more than a decade ago. He passed away in a motorcycle accident and did not have any HPS coverage. A sizeable mortgage remained outstanding and it was left to my aunt and cousins to commit significant resources to continue making mortgage payments on top of their own commitments. At that time, I thought HPS non-coverage was a rare occurrence, but years later, it was heart-breaking to find out that some of my own residents, albeit a small number, found themselves in exactly the same position as my aunt and cousins when the sole-breadwinner passes away unexpectedly.
To that end, I wish to acknowledge the compassion shown by the CPF Board and HDB staff to try their best to assist affected families by retrospectively reinstating HPS coverage in certain cases, so that the other family members do not face hardship. In my last term, one particular family benefitted from the CPF and HDB’s thoughtfulness and were profuse in their appreciation to me for pursuing their matter. But all the appreciation should rightfully go to the agencies concerned.
Amendments to the Scheme
According to the CPF, as of 2013, about 70% of all HDB flat owners were covered by the Home Protection Scheme (HPS). In 2012, a total of 1,074 claims amounting to $89.8 million dollars were made to HPS policyholders.
At the 2014 Committee of Supply debates, I spoke on the HPS, requesting the Ministry to require HDB flat owners who were paying for their mortgage in cash, to sign up for the HPS as a matter of course. More generally, the cut requested the Government to step up education on the importance of the HPS especially for low to middle income households. Separately, the statistics pointed to an increase in the number of members who had lapsed in their HPS premium payments or who were no longer insurable for medical and other reasons. It was 1.7% and 2% respectively in April 2011; And by October 2013, the percentages had increased to 2% and 3%.
To this end, I welcome the current amendments to allow co-owners – who could be family members and not just spouses, to help pay for the HPS premiums. This should mitigate or reduce the number of lapsed policyholders going forward. However, for greater clarity, can the Minister give the House a primer on the regulations the CPF has in mind to issue in reinstating HPS insurance cover or pay claims when it is not liable to do so?
Improvements to the Scheme
While I welcome all the HPS related amendments, I have three suggestions to make to strengthen the scheme.
A. Covering Singaporeans with pre-existing illnesses
In 2011, the HPS scheme was improved by allowing for portability, so in the event the home owner who purchased a new HDB flat was no longer in good health, he would be remain insured under the scheme by way of earlier participation. This amendment acknowledged that a member in ill-health could yet be covered so as not to prejudice him/her.
With the induction of Medishield Life by the Government, the seminal change differentiated it from the old Medishield scheme was the inclusion of members with pre-existing conditions, albeit with a 30% increase in premiums payable. The philosophical basis of this move was in concert with aim of making Singapore an inclusive society.
Similarly, HPS coverage for Singaporeans with pre-existing illnesses will buttress this aim. The Government has raised its concerns about such an expansion specifically on premium affordability in the past, and this is not an irrelevant consideration – however similar misgivings were overcome in the move from Medishield to Medishield Life.
In August 2015, CPF paid out more at least $400 in HPS rebates to each of the 470,000 Singaporeans and PRs. This came up to almost $1.9b, and with yet many thousands of other homeowners receiving less than the $400 but received a rebate nonetheless. The last time such rebates were paid out was in 2006. In between, in 2011, HPS premiums were lowered by an average 12% for about 80% of members. The remaining 20% were already paying low premiums.
With these numbers in mind, it would appear that there is some scope to relook the prospect of covering members in poor health under the HPS. I hope the Board can commit itself to look at this seriously to cover Singaporeans with pre-existing illnesses.
B. Plugging gaps for lapsed policyholders
While HPS is compulsory for all members who use their CPF to pay for their HDB flats, subject to HDB’s approval, members can choose to opt-out should they take up a similar mortgage reducing insurance (MRI). In 2015, it was made known that 43,610 flat owners had been given permission to do so by HDB. However, my understanding is that CPF does not monitor these members thereafter, allowing them to opt out of the MRI shortly thereafter. In such a case, these households effectively fall through the crack. Can the Minister confirm if the CPF will consider plugging this hole in future, and require them to sign up to the HPS in the event the lapse of their MRI.
C. Reminders
I understand the CPF sends a two reminder letters to the policyholder in the event of premium non-payment – in an effort to highlight the importance of the scheme can I confirm if these notifications are by ordinary post or registered mail? In addition, early reminders to the policyholder of low CPF balances for HPS premiums may be a powerful signalling tool that can prompt members to top up their OA accounts, or at the very least seek assistance early if they have other financial problems.
Conclusion
In conclusion Mdm Speaker, when I spoke on raising the awareness of the HPS in the 2014 Committee of Supply Debates, the Minister of State replied that the HDB issues a booklet upon the purchase a property to educate home-buyers of the scheme. With a rising senior citizen population and constant reminders in the press about how Singaporeans do not plan well for retirement, the Ministry should step up its efforts to constantly inform home owners of the benefits of the scheme every few years, through brochures and pamphlets as they service their mortgages, and seriously look at including Singaporeans with pre-existing illnesses to improve the scheme further.
Mdm Speaker, I support the Bill.