The Life Insurance Association of Malaysia (LIAM), the Malaysian Takaful Association (MTA) and Persatuan Insurans Am Malaysia (PIAM) acknowledge the concerns raised by policyholders regarding the recent increase in medical premiums. We understand that these adjustments may cause concern, and we are committed to providing transparency and support during this time.
Rising Claims and Medical Inflation
Over the period of 2021 to 2023, the insurance and takaful industry has experienced an unprecedented cumulative medical claims cost inflation rate of 56%. This surge, driven by various factors such as the rising costs of medical treatments, advanced healthcare technologies, and increased utilisation of healthcare services, has made premium repricing an unavoidable measure. Beyond inflation, the repricing quantum are also affected by factors such as individual risk rating, risk pooling, product benefits and features as well as expected claims payout.
Although insurers and takaful operators have different repricing cycles, they typically review and adjust premiums every three years to ensure the sustainability of medical insurance plans. The accumulated impact of claims inflation has resulted in upward premium adjustments.
Key Factors Driving Medical Inflation
Several factors contribute to the rising premiums:
- Rising Costs of Medical Equipment and Treatments: The use of advanced technologies and innovative treatments improves healthcare outcomes but also raises operational costs.
- Increased Utilisation of Healthcare Services: A growing number of policyholders are seeking medical care, including post-pandemic treatments and elective surgeries.
- Higher Operational Costs in Private Healthcare: Escalating costs in private hospitals inevitably affect their pricing structures.
- High Prevalence of Non-Communicable Diseases (NCDs) like diabetes and obesity raises demand for long-term care.
- Aging Population leads to higher demand for medical care due to increased illnesses.
Industry Support for Cost Containment Initiatives
The industry welcomes the recent announcement by the Association of Private Hospitals Malaysia (APHM) on establishing a cost containment unit to manage healthcare costs. This initiative seeks to ensure healthcare services remain affordable while maintaining high standards of care.
The industry is also supportive of the Health Minister’s call for a value-based healthcare delivery system. By focusing on delivering better health outcomes at sustainable costs, this approach can help balance affordability and quality in the long term.
In addition, the introduction of co-payment options in September this year offers a long term solution to assist policyholders to manage their policy. Co-payment options aim to reduce premiums by sharing medical costs with policyholders, encouraging more mindful healthcare usage in the long term.
Dedicated support for policyholders
The industry continues to engage with Bank Negara Malaysia (BNM) to manage healthcare costs. Understanding the challenges faced by policyholders, insurers and takaful operators are committed to providing comprehensive support. In this respect, the industry is committed to, among others:
- Stagger repricing adjustments to manage impact to customers;
- Establish a dedicated hotline for each company and relief program to ensure ease of access to policyholders:
- Offering flexible premium/contribution payment plans to affected policyholders;
- Offering options for different protection plans at comparatively lower or the same premium/contribution; and
- Implement effective redress mechanisms, including dedicated communication channels for affected customers.
Further details on the measures will be announced soon.
We remain concerned that some policyholders will struggle to maintain their coverage, particularly senior citizens, and continues to work with stakeholders, like APHM and MOH to find solutions to bring claims inflation under control. We remain dedicated to ensuring that policyholders have access to the best possible protection and healthcare services while addressing their concerns.
For further information, policyholders are encouraged to contact their respective insurers or takaful operators.
