Insurance and takaful industry calls on stakeholders to tackle medical costs and premium inflation

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KUALA LUMPUR (November 30): The insurance and takaful industry calls on all stakeholders such as Bank Negara Malaysia, private hospitals and doctors to collaborate with industry to deal with rising medical costs and premium inflation.

Life Insurance Association of Malaysia (LIAM) Managing Director Mark O’Dell said the cost of medical care in private hospitals in Malaysia has increased, along with premiums / contributions from private medical insurance and takaful .

“The main drivers of inflation in medical care and premiums / contributions are advances in medical treatment, equipment, supplies and imported drugs, the high prevalence of noncommunicable diseases, the aging of the population and the increasing benefits and policy design, ”he said. Bernama in an interview recently.

O’Dell said medical inflation is a global problem and the annual global inflation rate would have been 8%, almost identical to medical inflation in Malaysia.

“In recent years, claims have grown faster than premiums. In the long run, this threatens the sustainability of private health insurance.

“For LIAM members, from 2017 to 2019, expenses and operational costs fell to 9.1% of premiums / contributions, while claims rose to 88.6% of premiums,” he said. declared.

In a survey of LIAM members, the average increase in annualized premiums for all health and medical insurance policies from 2017 to 2021 was 6.47%.

However, the increase may seem much larger since the rate revision only occurs every three to five years. The survey showed that the increase in premiums was lower than the average increase in the actual cost of claims.

The study conducted by Actuarial Partners in 2020 found that the average cost of covered hospitalizations increased by an average of 9.3% for non-surgical treatments and 7.8% for surgical treatments out of four million claims made between 2013 and 2018.

At the same time, the study also suggested that insurers and takaful operators introduce more alternative plan designs with lower premiums and cost-sharing arrangements for policyholders to maintain their medical coverage and encourage cost control.

“We also need greater transparency by publishing the average cost of common procedures and treatments, which can enable policyholders to make better healthcare decisions.

“We also suggest automating and digitizing letter of guarantee processes to reduce administrative costs and improve the insured patient experience,” he added.

The industry had an average of nine million individual policyholders in 2020.


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