Malaysia Medical Insurance Inflation

Controlling the unabated rise of medical inflation in Malaysia is integral in ensuring that health insurers remain relevant in the industry and are able to provide affordable and extensive coverage in the market.

Malaysia’s medical and health insurance market reportedly has the highest average gross medical inflation, coming in at approximately 15.4% in 2018, and is expected to continue rising.

Among the reasons driving medical inflation higher in the country are the rise in non-communicable diseases, higher average life expectancy and the costs associated with employing the relevant staff to operate new and advance medical technology.

This means Malaysians will be paying more for healthcare in the coming years and medical insurance premiums will be pushed higher.

There is immense untapped potential in the life insurance market today, with only an estimated 54% of the Malaysian population covered by life insurance or takaful plans. This means only 34 out of 100 people in Malaysia are insured when accounting for policyholders with more than one life or takaful policy, according to findings by LIAM.

Escalating private healthcare costs are prompting more and more Malaysians to seek out protection, but insurance premiums rising in tandem with medical costs could keep many Malaysians uninsured or having protection plans without extensive coverage.

In its 2018 annual report, LIAM said discussions are being held with the Ministry of Health (MoH) and Association of Private Hospitals Malaysia to look into medical cost containment measures.

Among the initiatives being explored is standardising the billings used by private healthcare providers and introducing medical fee benchmarks by publishing the charges of common medical procedures in private hospitals.

These are in view of promoting transparency in how healthcare expenditure is being charged across various private settings, LIAM said.

“It is important that hospital and medical charges are transparent to the public to help them make informed decisions of the cost of treatment. Moving forward, the industry will continue to engage with the MoH and other stakeholders to manage the increasing healthcare expenditure,” it said.

The life insurance industry has been regulated by Bank Negara Malaysia since the supervision of the entire insurance industry was brought under the central bank’s ambit back in 1988.