Debate on medical insurance price hike

CONSUMERS are hoping for a good start to 2021 – by asking insurance companies not to raise medical insurance prices in the new year.

A hike on premiums by most insurance companies was supposed to take place in 2020, but they decided to defer it to 2021 in light of the Covid-19 pandemic.

However, the Federation of Malaysian Consumers Associations (Fomca) says this is still too soon, as many are still grappling with financial constraints and uncertainty.

“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, ” says Fomca president Datuk Dr Marimuthu Nadason in an interview.

Dr Marimuthu: 'Over 700,000 people are unemployed and many have taken pay cuts to survive and put food on the table.'

The call to delay the price hike has been backed by the National Association of Malaysian Life Insurance and Family Takaful Advisors (Namlifa).

Both Fomca and Namlifa have also previously called on Bank Negara Malaysia to intervene and protect consumers.

“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, ” explains Namlifa president AM Naidu.

Depending on the insurer and individual policies, the price hike could take effect as early as January 2021.

However, the situation could change if all parties are willing to work together.

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Bank Negara tells Sunday Star it has been engaging key stakeholders to manage the medical insurance repricing.

“However, renewed commitment is needed to address this issue holistically at a national level, ” says the central bank.

The bank says it recognises the challenges faced by many Malaysians arising from the pandemic.

But it points out that insurance industry players have introduced steps to preserve protection coverage for policyholders with financial difficulties.

This includes temporary premium or contribution deferment, interest-free installment payments, or the ability 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 more than RM74mil collectively, ” Bank Negara says.

The bank urges policyholders or takaful participants to contact their respective ITOs or agents to find out about the options available that best meet their needs.

“It’s important to note that for medical and health insurance and takaful (MHIT) products, premiums and contribution adjustments are highly impacted by medical cost inflation, ” Bank Negara says.

It highlights 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, based on its 2019 annual report.

“This trend, coupled with the rising cost of private medical care in Malaysia, which is reported to be among the highest in South-East 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, ” Bank Negara Malaysia adds.

However, consumers are strongly against the hike to be implemented so soon as it is untimely.

“Over 700,000 people are unemployed and many have taken pay cuts to survive and put food on the table, ” says Dr Marimuthu.

Dr Marimuthu, who is also Consumers International president, says he is collaborating with the 121 member countries in the organisation to find the best available policy coverage so that it can be implemented here.