KISS - Keep It Sweet & Simple

To protect consumers, Bank Negara wants the insurance industry to make their policies easier for the public to understand. The regulatory body has issued product transparency and disclosure guidelines to insurance providers, emphasising the importance of using “plain and intelligible language” in policy documents.

This is to make it easy for consumers to understand their contractual rights and responsibilities, so that they can make informed decisions, a central bank official said.

Work is already in progress to improve the wording in hospital and surgical insurance policies to ensure that simple words are used to explain and draw attention to important terms and conditions of the policy, including, in particular, the medical conditions covered and those excluded from the policy.

 

On the pricing of medical and health insurance products, she said these were determined by the insurance company or takaful operator based on actuarial principles. Any changes to factors like exposure to anti-selection risk and medical inflation might lead to a review of the premiums, she explained.

There are, however, safeguards in place. Insurance product pricing requires a qualified actuary of the insurance company to certify the reasonableness of the premium charged. This is influenced by economic factors such as medical inflation, mortality and morbidity rate as well as investment performance of the insurer.