MEF: Rising Insurance Premiums Put Financial Strain On MSMEs

Samuel Chua

16th December 2024 - 2 min read

The Malaysian Employers Federation (MEF) has expressed concerns that rising insurance premiums could place significant financial strain on businesses, particularly micro, small, and medium enterprises (MSMEs).

MEF president Datuk Dr Syed Hussain Syed Husman stated that sharp increases in insurance premiums, ranging between 40% and 78%, could severely impact MSMEs, which often operate within tight financial margins. He cautioned that businesses might have no choice but to pass on these additional costs to consumers, potentially driving inflation, increasing overall price levels, and reducing purchasing power.

“To mitigate increased costs, some employers may reduce their insurance coverage levels, leading to less comprehensive health benefits for employees. Adjustments in benefits may have several implications on employee retention, workforce morale, productivity, and competitiveness,” he said.

In light of these challenges, MEF highlighted that many employers have implemented precautionary measures to control medical claims by focusing on improving employee health. This includes strategies to stabilise insurance costs, such as promoting wellness initiatives and providing flexible work arrangements. Nearly half of private-sector employers in Malaysia now offer flexible work arrangements, allowing employees to manage their schedules, thereby improving work-life balance and overall health.

Syed Hussain also pointed out that household health expenditures in Malaysia rely heavily on out-of-pocket payments, accounting for approximately 34%. This figure is higher compared to Singapore’s 30.1% and the Organisation for Economic Co-operation and Development (OECD) average of 13.9% as of 2019.

He explained that this reliance on out-of-pocket payments reflects a growing demand for private healthcare services, given the challenges faced by Malaysia’s overcrowded public healthcare system. This, in turn, has led to a push for private healthcare insurance (PHI) ownership. However, despite the increasing demand, PHI coverage in Malaysia remains relatively low.

Citing data from the National Health Morbidity Survey 2019, only 14.3% of Malaysians owned individual-purchased private health insurance, while 14.6% had employer-sponsored coverage. A smaller portion, 7.3%, had both types of health insurance, leaving 63.7% of the population without any form of coverage.

Syed Hussain also reaffirmed MEF’s position that medical health insurance must be made more affordable and accessible to encourage both employers and employees to secure coverage.

(Source: The Edge)

Samuel Chua

Samuel writes about personal finance and financial news, focusing on how banking updates, policies, and promotions affect everyday money decisions. He enjoys making complicated financial topics easier to follow. Outside of writing, he spends his time watching TV shows and occasionally convincing himself he will only watch one episode.

0 0 votes

Article Rating