PLATFORM workers in Singapore – such as private-hire workers, delivery workers and taxi drivers – had lower insurance coverage for critical illness and mortality compared to their economically active counterparts last year, a study has found.
Platform workers had a 59 per cent mortality protection gap, compared to 21 per cent for all economically active Singaporeans and permanent residents, which include platform workers.
Their protection gap for critical illness stood at 91 per cent, much higher than the 74 per cent for all economically active workers, the study found.
The protection gap refers to the shortfall in insurance coverage required for the policyholder and his dependents to maintain their current standard of living if the policyholder encounters a critical illness or dies.
The wider protection gap among platform workers was due to their lower Central Provident Fund and deposit savings, as well as lower insurance coverage compared to their economically active peers, indicated The Protection Gap Study 2022, which was published on Friday (Sep 8).
The study, which is commissioned by the Life Insurance Association (LIA) Singapore and conducted independently by EY, is the third such study to be released. The first study was released in 2012, followed by a second in 2017.
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The nation-wide study aims to provide insight for industry players and employers to implement strategies to help individuals meet their protection and financial planning needs.
The study used insurance data available until Dec 31, 2021 from insurers, coupled with public data analysis of economically active individuals in Singapore between the ages of 20 and 69 who have at least one dependent.
It comprises analysis of policy data from life insurers, as well as a supplementary market survey of 775 economically active individuals.
This is also the first time that LIA Singapore has included an analysis of protection needs for platform workers.
LIA Singapore said that it had done so in recognition of platform workers being “a growing segment within the community”.
It noted that platform workers had indicated in its market survey that they are not covered under group insurance offered by platform providers. Some are also unaware if they receive group insurance coverage.
Platform workers surveyed also said that they would like the life insurance industry to establish accessible touchpoints that can provide financial planning guidance and support for them.
“The industry recognises that these touchpoints could include roadshows at the offices of platform providers,” said the study.
Overall, the study found that the gap of 21 per cent for mortality coverage translates into a gap of S$373 billion for all economically active individuals last year.
There was a total gap of 74 per cent for critical illness, or SS$579 billion, for them last year.
The study also found that despite the increase in mortality protection needs for economically active individuals, their protection gap remained relatively unchanged, decreasing two percentage points compared to 2017.
While mortality protection needs had increased due to an overall increase in cost of living and the number of economically active individuals, the study said that the protection gap remained unchanged as people’s incomes and savings had also gone up. The increase allowed them to offset the increase in their mortality protection needs, said the study.
On the other hand, the protection gap for critical illness among economically active individuals in 2022 had lowered by seven percentage points from 81 per cent in 2017.
The study attributed the narrowed gap to an approximately 63 per cent increase in critical illness coverage among economically active individuals since 2017.
Dennis Tan, president of LIA Singapore, said the study showed that while mortality and critical illness protection gaps persist, there has been progress since the last study in 2017.
“While this progress is encouraging, we know more can and must be done to support different members of our community, such as our platform workers,” said Tan.
He added that the life insurance industry will “continue leading the charge” on these efforts.
Among other things, the study recommended simplifying policy material, such as using layman language to explain policy, as well as tailoring product solutions to different segments such as the lower income.
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