By Zufazlin Baharuddin
KUALA LUMPUR, Dec 22 (Bernama) — A assessment of the insurance coverage trade’s efficiency in 2024 will undoubtedly have to incorporate the backlash confronted by the insurance coverage and takaful trade after it introduced a steep hike in medical insurance coverage premiums.
The premium hike for medical insurance coverage stunned policyholders who’re already paying excessive month-to-month premiums and turning into involved about whether or not they can keep paying for his or her protection and the long-term sustainability of insurance coverage insurance policies.
For the rakyat, it’s now a battle to entry non-public medical care with out well being or medical insurance coverage because of excessive costs in addition to rising dwelling prices.
Many are questioning the choice of insurers and takaful operators (ITOs) to boost premiums, reportedly by 40 to 70 per cent, regardless of reviews of robust income and constant income development from insurers and personal hospitals.
Moreover, non-public hospitals have proven robust monetary efficiency, pushed by elevated demand for healthcare companies and rising medical prices.
To justify the upper premiums, the Life Insurance coverage Affiliation of Malaysia (LIAM), the Malaysian Takaful Affiliation (MTA), and the Common Insurance coverage Affiliation of Malaysia (PIAM) stated the trade skilled an unprecedented cumulative medical claims value inflation charge of 56 per cent from 2021 to 2023.
The surge in claims was attributed to numerous elements, such because the rising prices of medical therapies, superior healthcare applied sciences and elevated utilisation of healthcare companies, which have made premium repricing an unavoidable measure.
The problem additionally caught the eye of members of Parliament (MPs), who raised the matter within the Dewan Rakyat, prompting a closed-door briefing to all MPs on the medical insurance coverage premium hike.
On Dec 10, Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim allayed public considerations over the premium hikes when he stated that BNM and the Well being Ministry (MoH) will determine on a management mechanism to make sure premium hikes are affordable and don’t burden the folks.
This was additional bolstered by Finance Minister II Datuk Seri Amir Hamzah Azizan on the Dewan Negara when he stated that BNM will announce additional particulars on interim measures to deal with the rise in insurance coverage premiums quickly.
On Dec 13, Communications Minister Fahmi Fadzil stated the central financial institution wanted just a little extra time earlier than making an announcement.
BNM publicizes interim measures on MHIT premium changes
In the meantime, BNM introduced on Dec 20 that interim measures to assist handle the influence of medical and medical insurance and takaful (MHIT) premium changes, with ITOs to unfold out the modifications in premiums over a minimal of three years for all policyholders affected by the repricing.
The central financial institution stated this measure will stay in place till the top of 2026.
“With this measure, a minimum of 80 per cent of policyholders are anticipated to expertise yearly premium changes, because of medical claims inflation, of lower than 10 per cent,” it stated.
BNM stated one other interim measure is for policyholders aged 60 and above who’re lined below the minimal premium/contribution plan of the MHIT product they bought.
It stated the measure would require ITOs to quickly pause premium changes for one yr from their coverage anniversary.
“Moreover, policyholders who’ve surrendered or whose MHIT insurance policies have lapsed in 2024 as a result of repricing can attain out to their ITOs to request a reinstatement of their insurance policies based mostly on the adjusted premium below this measure with out further underwriting necessities.
“Additionally, all ITOs will present applicable various MHIT merchandise on the identical or decrease premiums for policyholders who don’t want to proceed their present MHIT plans which were repriced,” it stated.
Reviewing repricing methods
BNM had, earlier on Nov 28, directed ITOs to assessment their repricing methods for a extra affordable implementation, contemplating the influence on policyholders and contributors.
The ITOs are required to supply viable choices for coverage homeowners and takaful contributors who’re considerably impacted by the upper premiums or contributions to proceed having insurance coverage or takaful protection.
In the meantime, the Nationwide Affiliation of Malaysian Life Insurance coverage and Monetary Advisors (NAMLIFA) has strongly urged BNM and the Ministry of Finance (MoF) to quickly halt medical premium repricing workouts.
Its president, Krishnan Appanu, instructed that ITOs discover the potential for introducing staggered premium will increase with versatile cost plans that ease the burden on customers.
He stated that BNM, along with the MoF and MOH, is at present trying into it and can problem strict pointers to make sure that ITOs take a number of elements into consideration, comparable to inflation.
Earlier this yr, BNM required ITOs to introduce a co-payment choice for his or her MHIT merchandise by Sept 1, 2024, aiming to supply extra sustainable and reasonably priced choices.
The brand new regulation has sparked some confusion among the many folks, depicting the co-payment as obligatory, which could have an effect on present customers who’ve already bought full protection MHIT plans.
Nonetheless, BNM and trade leaders are working to clear issues up, assuring the co-payment for MHIT merchandise is non-compulsory with decrease premiums and doesn’t have an effect on present customers.
BNM stated that the premium or contribution degree for MHIT merchandise with co-payment options is nineteen per cent to 68 per cent decrease in comparison with comparable merchandise with out co-payment options, relying on the extent of co-payment.
Total efficiency of life and basic insurance coverage, takaful trade in 1H 2024
Within the Monetary Stability Evaluate First Half 2024 launched by Financial institution Negara Malaysia (BNM), it was reported that the general profitability of life insurance coverage and household takaful funds has elevated to RM8.4 billion within the first half (1H) of 2024, as in contrast with RM6.0 billion in 1H 2023 and RM3.2 billion in 2H 2023, respectively.
“Total profitability of insurance coverage and takaful funds elevated on robust investments and improved underwriting efficiency,” BNM stated.
The central financial institution stated the sustained development in new enterprise premiums continued to assist the general profitability of life insurance coverage and household takaful funds, with new enterprise premiums increasing by 11 per cent in 1H 2024, led by medical and well being merchandise in addition to investment-linked merchandise.
In the meantime, working income had been broadly sustained in 1H 2024 at RM1.7 billion within the basic insurance coverage and takaful sector, in comparison with RM1.3 billion in 1H 2023.
“Underwriting efficiency was supported by sustained development in gross direct premium from the motor section, stemming from increased automotive gross sales in tandem with beneficial financial circumstances and profitable new mannequin launches, together with electrical automobiles.
“This was regardless of increased provisions for motor claims (1H 2024: RM600 million; 2H 2023: RM300 million) commensurate with sturdy enterprise development, in addition to rising restore prices,” it stated.
BNM added that decrease claims from important flood occasions in comparison with earlier years and sustained funding revenue additionally helped assist the working income of basic ITOs.
Sectorial outlook in 2025
The upper tax reduction on medical insurance coverage, which was raised to RM4,000 below Funds 2025 from RM3,000 beforehand, will probably assist development within the insurance coverage trade in 2025.
Nonetheless, BNM opined that uncertainty in monetary market circumstances will proceed to current a key draw back danger to ITOs’ earnings, given their sizeable exposures to bond and fairness investments.
“Additional losses from medical inflation may enhance dangers of decreased entry to reasonably priced medical insurance coverage and takaful protection, leaving households probably extra weak to monetary shocks,” it stated.
Moreover, exposures to local weather occasions, notably floods, may see elevated volatility within the efficiency of basic ITOs, BNM added.
— BERNAMA
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