Issues on insurance coverage for Covid-19 treatment


HAVING read various news reports and press statements about the availability (or non-availability) of insurance coverage for Covid-19 hospitalisation, I’ve been compelled by my conscience to pen this letter.

Firstly, it is important to draw reference to the joint press statement issued by the Life Insurance Association of Malaysia (LIAM) and Malaysian Takaful Association on Jan 31,2020 and Jan 17,2021. The latter also included the General Insurance Association of Malaysia (PIAM).

At this juncture, it is important to note that LIAM, MTA and PIAM are industry representatives of the respective Malaysian insurance companies and takaful operators.

On Jan 17,2021, LIAM, PIAM and MTA issued a joint press statement titled “Insurance and Takaful Industry Commits to Private and Public Partnership to Manage the COVID-19 Pandemic" (https://bit.ly/2KXCBAY). The second paragraph of the statement basically states that in general, pandemic-related risks are not covered under any insurance and takaful plans worldwide.

The statement goes on to say that the exclusion stems from the difficulty in pricing for coverage relating to an event like a pandemic that may occur once in a lifetime, having an incalculable impact and cost.

The statement reiterates that Covid-19 is a pandemic, hence it is not insured/covered under medical and health insurance/takaful benefits.

This statement, I’m afraid, is not absolutely true for life and hospitalisation coverage be it insurance or takaful as it does not specifically exclude pandemic-related risks in an outright fashion.

Further, the statement seems to be glaringly contradictory to the conduct of LIAM, PIAM and MTA members who had introduced a slew of different insurance products addressing the pandemic. A lot of these products were launched after the World Health Organisation (WHO) declared Covid-19 as a pandemic.

With that said, a summary of products introduced by MTA members as of April 3,2020 can be seen at https://bit.ly/3qZjXHZ.

If the pandemic risk is indeed excluded or is difficult to price, policyholders and members of the public should have been informed of the same in March 2020 when the pandemic was declared.

Logically, new products covering the pandemic shouldn’t have been introduced. However, this was not done and new insurance products covering the pandemic were actually introduced.

Be that as it may, the statement of Jan 17 goes on to imply that despite the "pandemic" exclusion, in response to the nation’s immediate need in the early stage of the pandemic in 2020, majority of life insurers and takaful operators have provided supplementary benefits such as daily hospital income to be paid to the affected policyholders/certificate holders.

Herein lies the fundamental contradiction with the joint statement made by LIAM and MTA on Jan 31,2020 (https://bit.ly/3cdFwAH). Titled "Health Insurance/Takaful Coverage For Novel Coronavirus (2019-NCOV)", it states: “The Life Insurance Association of Malaysia (LIAM) and Malaysian Takaful Association (MTA) wish to inform that all life insurance companies and takaful operators will provide hospitalisation coverage/treatment due to Novel Coronavirus (2019-nCoV) to their policyholders/certificate holders.”

The same statement goes on to quote the announcement of LIAM CEO Mark O’Dell as follows: “Even though a majority of the medical policies/certificates carry an exclusion on communicable diseases requiring quarantine by law, the Malaysian life insurers and takaful operators are responding to an immediate need of the nation by waiving the exclusion on quarantine by law in light of the increasing number of people who have been affected.”

The Jan 31 statement doesn’t draw any reference to the illusive "pandemic" exclusion mentioned in the Jan 17 press statement, which has been often quoted since. Nevertheless, it does acknowledge that most policies have a specific exclusion that may deny coverage for Covid 19 treatment – the "communicable diseases requiring quarantine by law" exclusion.

However, the Jan 31 statement clarifies that the said exclusion will be waived in light of the increasing number of people being affected. It further acknowledges that WHO has just declared the outbreak of the coronavirus as a global health emergency.

LIAM and MTA were therefore fully aware that WHO had declared the outbreak as a global health emergency, they were cognizant that the number of people being infected was increasing and that some policies may exclude cover for hospitalisation coverage and/or treatment but had decided collectively to waive the exclusion and promised affirmative cover in place for the novel coronavirus.

In light of this, life insurers and takaful operators need to honour their promise. On policies or contracts that do not carry the communicable disease requiring quarantine by law, they need to ensure that cover is provided without any caveat. I say this because I have heard that one particular insurer has issued a memo saying that cover will be on a reimbursement basis as opposed to pay on behalf.

For those policies that have the exclusion for communicable disease requiring quarantine by law, all life insurers and takaful operators who stepped forward on Jan 31,2020 and promised cover shouldn’t renege on the "gentleman's" word and thus honour their promise. It is not only the honourable thing to do; it is also the right thing to do.

I wrote to both LIAM and MTA last week, expressing clearly that this is a matter of utmost urgency. To date, neither parties have responded to my email, but MTA has acknowledged receipt and promised to address the concern.

As this is a matter of utmost public importance, I urge both parties to provide clarity on the “pandemic” and affirm coverage is in place, as they did on Jan 31,2020.

DEVAKUMURAN PALNISAMY

Kuala Lumpur

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