KUALA LUMPUR: Insurance companies have agreed to "stagger" medical insurance premium increases and offer flexible premium payment plans.
This follows a directive by Bank Negara Malaysia to review their repricing strategy and help contain rising health insurance premiums, which reportedly are expected to rise by 40 per cent to 70 per cent next year.
They also promised to offer different plans at comparatively lower or the same premium.
A statement by Bank Negara on Thursday used the same language as the insurance industry that it regulates, describing rising health insurance premiums as "repricing".
The Life Insurance Association of Malaysia (Liam), Malaysian Takaful Association (MTA) and Persatuan Insurans Am Malaysia (Piam) blamed an "unprecedented" cumulative medical claims cost inflation of 56 per cent from 2021 to 2023.
"This surge, driven by various factors such as the rising costs of medical treatments, advanced healthcare technologies, and increased utilisation of healthcare services, has made premium repricing an unavoidable measure.
"Beyond inflation, the repricing quantum is also affected by factors such as individual risk rating, risk pooling, product benefits and features as well as expected claims payout," they said in a joint statement late Thursday.
The statement did not mention the quantum of increase in medical insurance premiums charged on policyholders from 2021-2023 as well as the growth in the number of policyholders over the three years.
We have reached out to Liam, MTA and Piam on this.
Meanwhile, the associations explained that although insurers and takaful operators have different repricing cycles, they typically review and adjust premiums every three years to ensure the sustainability of medical insurance plans.
"The accumulated impact of claims inflation has resulted in upward premium adjustments," the statement said.
The associations said they will also establish a dedicated hotline for each company and relief programmes to ensure ease of access to policyholders.
This includes offering flexible premium/contribution payment plans to affected policyholders and offering options for different protection plans at comparatively lower or the same premium/contribution.
They added that they are committed to implement effective redress mechanisms, including dedicated communication channels for affected customers.
"Further details on the measures will be announced soon. We remain concerned that some policyholders will struggle to maintain their coverage, particularly senior citizens, and continue to work with stakeholders, like Association of Private Hospitals Malaysia (APHM) and Ministry of Health to find solutions to bring claims inflation under control, it added.
The industry welcomes APHM establishment of a cost containment unit to manage healthcare costs and believes that introduction of co-payment options in September this year offers a long term solution to assist policyholders to manage their policy.