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BUSINESS

Insurance, takaful industry calls on stakeholders to address medical cost and premium inflation

30/11/2021 05:59 PM

By Zufazlin Baharuddin

KUALA LUMPUR, Nov 30  -- The insurance and takaful industry calls on all stakeholders such as Ministry of Health, Bank Negara Malaysia, private hospitals and doctors to work together with the industry to address the rising medical cost and premium inflation.

Life Insurance Association of Malaysia (LIAM) chief executive officer Mark O'Dell said the cost of medical care at private hospitals in Malaysia has been increasing along with the premiums/contributions of private medical insurance and takaful.

“The major drivers of medical and premium/contribution inflation are advances in medical treatment, imported equipment, supplies and medicines, high prevalance of non-communicable diseases, aging population and increasing benefits and policy design,” he told Bernama in an interview recently.

O’Dell said medical inflation is a global issue and the annual inflation rate globally has been reported to be 8 per cent, nearly identical to the medical inflation in Malaysia.

“In recent years claims have been increasing at a faster rate than premiums. Over the long term, this threatens the sustainability of private medical insurance.

“For LIAM members, from 2017 to 2019 expenses and operational costs have fallen to 9.1 per cent of premiums/contributions while claims have risen to 88.6 per cent of premium,” he said.

In a survey of LIAM members, the average annualised premium increase for all MHI policies from 2017 to 2021 was 6.47 per cent. 

However, the increase may seem much larger as the rate revision only happens every three to five years. The survey shows that the premium increase was less than the average increase in the actual cost of claims.

The study conducted by Actuarial Partners in 2020 revealed that average costs of a covered hospitalisation rose at an average of 9.3 per cent for non-surgical treatments and 7.8 per cent for surgical treatments from 4 million claims made between 2013 and 2018.

Meanwhile, the study also suggests insurers and takaful operators introduce more alternative plan designs with lower premiums and cost sharing provisions for policy holders to maintain their medical coverage and encourage cost control.

“We also need a greater transparency by publishing the average costs of common procedures and treatment and this can empower policyholders to make better healthcare decisions.

“We also suggests to automate and digitise guarantee letter process to reduce admin costs and improve the insured patient experience,” he added.

To date, the industry has an average of 9 million individual policyholders in 2020.

-- BERNAMA

 

 


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