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Sunday, 20 April 2014

Hikes are death knells to policyholders, say industry veterans

PETALING JAYA: Insurance agents have called on the central bank to put a stop to “unjustifiable hikes”.

They are concerned that policyholders could lose their coverage if insurance charges and premiums continue to rise with medical inflation.

A 25-year industry veteran said Bank Negara, together with all stakeholders, should address the issue of rising medical costs or the country could end up with a “major social problem” soon.

“For now, you may only be paying RM8 or RM10 more in monthly premiums but what about six months down the road if there’s another hike?

“If nothing is done to curb rising insurance policy prices, government hospitals will find it hard to cope as the uninsured cannot afford private care,” she said.

A senior insurance agency manager, who declined to be named, said the 10% to 20% (depending on the policyholder’s age) rise in premiums had been taking place industry-wide.

The pinch would be felt by those aged 38 and above, with senior citizens “quite possibly” paying over RM100 more monthly, he said.

“Traditionally, the increase would only be for upgraded products but lately, insurance companies have started increasing charges and premiums on existing policies,” the manager said.

“This means that the policyholder has no choice but to fork out the extra or risk losing their coverage. Senior citizens and pensioners would suffer the most because if they cannot afford to pay more, they will have to look for a new policy which, at that age, would be very expensive, if not difficult.”

An agency manager with another insurance firm said those in their 20s need not worry “but once you hit 30”, be prepared for yearly premium rises of between 5% and 10%.

He said some insurance companies increased their product premiums because the medical cards were making losses.

Meanwhile, another agent said it was unfair for insurance companies to increase fees across the board when only one or two plans were making losses.

“Overall, they are still raking in good profits so, these hikes are meant to prevent their profit margin from shrinking – it is not a question of loss or profit.

“We have been warned to expect hikes every two to three years, depending on the claims made,” he said. “I do not know how to face my clients.”

According to the Life Insurance Association of Malaysia 2013 annual report, the year’s new business total premium was RM8.19bil, while the total premium for in-force policies amounted to RM28.3bil, a growth of 12.8%.

Claims paid out last year amounted to RM6.9bil.

Related Story:

Policyholders to pay more for coverage

Keep it simple, Bank Negara tells insurance firms

Bosses bracing for higher premiums for workers

Critical illness insurance coverage widens

Tags / Keywords: Health , Nation , rising health insurance


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