Insurers: Next year's price hike remains, gradual rise only in future

There will be no changes to the announced medical insurance premium hike for next year, said Life Insurance Association of Malaysia (Liam).

However, its chief executive officer Mark O’Dell told Business Times that insurers have agreed instead to implement gradual repricing adjustments in the future.

On Nov 26, the New Straits Times reported that medical insurance premiums are expected to rise between 40 percent and 70 percent next year following notices sent by insurance providers to policyholders.

Insurers cited the rising cost of medical care in private hospitals as the main reason.

The next day, PKR MP Sim Tze Tzin urged Bank Negara Malaysia to investigate insurance companies for excessive profiteering by increasing premiums.

“We would like to call on BNM to investigate and review insurance companies that have issued notices of insurance premium increases,” he was reported as saying.

On Nov 28, BNM urged insurers and takaful operators (ITOs) to review their repricing strategies for a more reasonable implementation.

The central bank said that included managing increases in premiums or contributions over time by taking into account the impact on policy owners or takaful participants.

Keeping it affordable

On that note, O’Dell explained the statement was referring to future repricing adjustments and not a review of the recent premium hikes for medical and health insurance/takaful (MHIT).

However, he said that insurers could look into more frequent pricing adjustments in the future as opposed to the practice of aggregating the increase over a period of three or four years.

This is to ensure prices remain below a certain threshold and do not burden policyholders.

On why the hike between 40 percent and 70 percent was mooted, O’Dell said it was to reflect a catch-up from pre-Covid-19 times, adding insurers had been asked to delay repricing during the pandemic.

“The MHIT pricing cycle, the companies will look at their premiums every three years, it is often misunderstood when there’s a 50 percent increase, it’s not just a one-year increase, it’s for three or four years,” he added.

Ongoing talks

Earlier in a statement, insurers cited rising costs of medical treatments, advanced healthcare technologies, and increased utilisation of healthcare services as reasons to readjust premium prices.

“As for the authorities, we have been asking the Health Ministry to mandate cost containment functions at private hospitals as a precursor to diagnostic-related group pricing, and to have a road map toward implementation of diagnostic-related group pricing, which we think will drive more efficiency in hospitals,” he said.

O’Dell said discussions are ongoing with BNM and the Health Ministry to explore measures insurers can implement to address the situation.

“I can’t say what those discussions are but I think things will be coming out very soon.

“We recognise no matter how justified things look, there are people who are still in a tough position because of it,” he added.

Insurance, takaful groups explain medical premium hike

COMMENT | Insurance and rising costs in private hospitals

Socso aims to provide 24hr injury coverage, 9m M'sian workers to benefit

Private health facilities will need to display price of medicine in 2025