The Life Insurance Association of Malaysia (LIAM), the Malaysian Takaful Association (MTA), and Persatuan Insurans Am Malaysia (PIAM) have proposed key recommendations to address the rising costs of healthcare and insurance premiums, following an engagement with the Public Accounts Committee (PAC). 

The insurance and takaful industry acknowledges the PAC’s efforts in tackling escalating medical inflation and healthcare expenses and looks forward to a “whole-of-nation” approach in the coming years. As part of their commitment, the industry has implemented interim measures to support policyholders affected by premium repricing. These measures aim to alleviate financial burdens while ensuring continued access to medical and health insurance and takaful (MHIT).

Among them, premium and contribution increases will be phased over three years until 2026, with annual hikes capped below 10% for most policyholders. Additionally, those aged 60 and above holding minimum MHIT plans will benefit from a one-year premium freeze. Policyholders whose coverage lapsed in 2024 due to repricing will be allowed to reinstate their policies without undergoing new underwriting, while insurers and takaful operators (ITOs) will introduce more affordable MHIT products by 2025.

In a bid to enhance affordability, transparency, and sustainability within Malaysia’s healthcare and insurance ecosystem, the industry has outlined several key recommendations. One of the main proposals is the implementation of Diagnostic-Related Grouping (DRG) pricing, which aims to improve transparency in medical charges and billing. Aligning cost structures between healthcare providers, ITOs, and Third-Party Administrators (TPAs) is deemed essential in managing healthcare expenses effectively.

The industry is also working alongside Bank Negara Malaysia (BNM) to develop a basic long-term sustainable insurance and takaful product, while allowing ITOs to offer top-up schemes for those seeking additional coverage. Greater transparency is another priority, with a proposal to publish the average costs of common procedures and treatments across private hospitals, along with annual medical cost inflation rates. The establishment of an industry-wide claims database is expected to improve claims analysis and help mitigate fraudulent claims.

A key long-term solution proposed by the industry is the introduction of a co-payment system for MHIT products. This mechanism, particularly co-insurance, encourages policyholders to share healthcare expenses, promoting responsible healthcare consumption. In parallel, the industry is calling for the regulation of pharmaceutical costs through collaboration with the Ministry of Health (MOH). The promotion of generic drugs and control of medication pricing are essential, given that pharmaceuticals constitute a substantial portion of private hospital revenue.

To further contain costs, private hospitals are urged to establish dedicated cost-containment units and to freeze price increases during periods when insurers and takaful operators are required to cap premium hikes. This approach aims to ensure that cost-control measures are equitably distributed across the healthcare ecosystem. 

Additionally, the industry is advocating for a tax exemption on group insurance from the 8% Sales and Services Tax (SST) to incentivise more employers to provide insurance and takaful protection for employees. Currently, approximately four million workers, including those from the B40 income group, receive coverage through workplace schemes.

Another proposal is the appointment of an independent consultant to conduct a comprehensive study on claims inflation. The findings will provide data-driven insights and recommend targeted actions to curb rising claims costs. 

Encouraging and incentivising healthier lifestyles is also a focus, with the industry proposing no-claim bonuses as a reward for policyholders who maintain good health. This initiative aims to promote overall well-being, strengthen policyholder engagement, and reduce unnecessary medical claims.

(Source: Life Insurance Association of Malaysia)

• TAGS:
• Health Insurance
• Insurance
• Life Insurance Association of Malaysia
• Malaysian Takaful Association
• Medical Insurance
• MTA
• PAC
• Persatuan Insurans Am Malaysia
• PIAM
• Public Accounts Committee