KUALA LUMPUR, Dec 22 — A review of the insurance industry’s performance in 2024 will undoubtedly have to include the backlash faced by the insurance and takaful industry after it announced a steep hike in medical insurance premiums.
The premium hike for medical insurance surprised policyholders who are already paying high monthly premiums and becoming concerned about whether they can maintain paying for their coverage and the long-term sustainability of insurance policies.
For the rakyat, it is now a struggle to access private medical care without health or medical insurance due to high charges as well as rising living costs.
Many are questioning the decision of insurers and takaful operators (ITOs) to raise premiums, reportedly by 40 to 70 per cent, despite reports of strong profits and consistent revenue growth from insurers and private hospitals.
Additionally, private hospitals have shown strong financial performance, driven by increased demand for healthcare services and rising medical costs.
To justify the higher premiums, the Life Insurance Association of Malaysia (LIAM), the Malaysian Takaful Association (MTA), and the General Insurance Association of Malaysia (PIAM) said the industry experienced an unprecedented cumulative medical claims cost inflation rate of 56 per cent from 2021 to 2023.
The surge in claims was attributed to various factors, such as the rising costs of medical treatments, advanced healthcare technologies and increased utilisation of healthcare services, which have made premium repricing an unavoidable measure.
The issue also caught the attention of members of Parliament (MPs), who raised the matter in the Dewan Rakyat, prompting a closed-door briefing to all MPs on the medical insurance premium hike.
On December 10, Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim allayed public concerns over the premium hikes when he said that BNM and the Health Ministry (MoH) will decide on a control mechanism to ensure premium hikes are reasonable and do not burden the people.
This was further reinforced by Finance Minister II Datuk Seri Amir Hamzah Azizan at the Dewan Negara when he said that BNM will announce further details on interim measures to address the rise in insurance premiums soon.
On December 13, Communications Minister Fahmi Fadzil said the central bank needed a little more time before making an announcement.
Meanwhile, BNM announced on December 20 that interim measures to help manage the impact of medical and health insurance and takaful (MHIT) premium adjustments, with ITOs to spread out the changes in premiums over a minimum of three years for all policyholders affected by the repricing.
The central bank said this measure will remain in place until the end of 2026.
“With this measure, at least 80 per cent of policyholders are expected to experience yearly premium adjustments, due to medical claims inflation, of less than 10 per cent,” it said.
BNM said another interim measure is for policyholders aged 60 and above who are covered under the minimum premium/contribution plan of the MHIT product they purchased.
It said the measure would require ITOs to temporarily pause premium adjustments for one year from their policy anniversary.
“Besides, policyholders who have surrendered or whose MHIT policies have lapsed in 2024 due to the repricing can reach out to their ITOs to request a reinstatement of their policies based on the adjusted premium under this measure without additional underwriting requirements.
“Also, all ITOs will provide appropriate alternative MHIT products at the same or lower premiums for policyholders who do not wish to continue their existing MHIT plans that have been repriced,” it said.
— Bernama
