The Federation of Malaysian Consumers Associations (FOMCA) has called for the price hike for medical insurance premiums, which is slated to take effect in 2021, to be deferred to 2023 instead. This is because many individuals are still facing financial difficulties following the Covid-19 pandemic.
“The price increase should take effect in 2023. Looking at the recovery rate, the economy is still weak, and it will take time for consumers to be able to fend for their families,” said the president of FOMCA, Datuk Dr Marimuthu Nadason. A price hike for medical insurance premiums had originally been scheduled for 2020, but insurance companies eventually decided to postpone it to 2021 following increasing financial difficulties among Malaysians, caused by the spread of Covid-19.
Dr Marimuthu further reiterated that the implementation of a price hike on the premiums so soon is untimely. “Over 700,000 people are unemployed, and many have taken pay cuts to survive and put food on the table,” he said.
FOMCA’s call for a delayed price hike on medical insurance premiums was also echoed by the National Association of Malaysian Life Insurance and Family Takaful Advisors (Namlifa) – both of which had previously reached out to Bank Negara Malaysia (BNM) to step in.
“The amount of price increase is dependent on the various insurers and takaful operators (ITOs) and policyholders, ranging from 5% to 40% per policyholder. It’s not set as a standard across the board. Older policyholders suffer higher increases compared to the younger ones,” said the president of Namlifa, AM Naidu. Depending on the insurer and individual policies, the price hike could take place as soon as January 2021.
Meanwhile, BNM explained that it has already been engaging key stakeholders in the medical insurance industry to oversee the repricing exercise. It also stressed that renewed commitment is required for all parties to address the issue holistically on a national level.
Additionally, the central bank said that while it recognises the challenges faced by many Malaysians during this difficult time, it’s also crucial to acknowledge the existing efforts already taken by insurance companies to help policyholders with financial difficulties. These include temporary premium or contribution deferment, interest-free instalment payments, as well as the option to switch to an alternative plan with no additional underwriting requirements.
“These flexibilities have provided financial relief to almost 60,000 affected policyholders and takaful participants, who opted to defer their premium payments by three months, totaling to more than RM74 million collectively,” said the central bank.
BNM also noted that the premium and contribution adjustments for medical and health insurance and takaful (MHIT) products are highly impacted by medical cost inflation. As evidence, the central bank shared that MHIT claims grew at a faster rate of 11.6% a year compared to the MHIT premium of 9.5% yearly between 2016 and 2019.
“This trend, coupled with the rising cost of private medical care in Malaysia, which is reported to be among the highest in Southeast Asia and above global average, continually puts pressure on the pricing of MHIT products. It also puts stress on the long-term affordability of private healthcare services in Malaysia,” said BNM.
(Source: The Star)