Medical Insurance Premium Increases

Insurance companies have been urged to stop increasing the premiums of medical insurance when consumers are still struggling to make ends meet which is very unjust and unfair. The Federation of Malaysian Consumer Association (Fomca) said this will impact the affordability of premiums for policyholders.

Fomca advocates for the deferment of repricing rollout by insurance companies which was initially intended to take effect in 2020. However, due to the severe economic disruption caused by the pandemic, the one-year postponement does not provide enough breathing space for policyholders who remain burdened by economic and employment uncertainties.

Hospital Occupancy Down - FOMCA claimed hospital occupancy has decreased tremendously due to the Covid-19, thus insurance companies will have a lesser pay out compared to previous years. This would result in a healthier loss/claims ratio as well as improved overall profitability for insurers.

Automatic Policy Loan - During these difficult time many policy holders would have taken loans against the insurance policies and now they are pressured to pay for the loans, premiums and now the premium hike. The Policy Loan and Automatic Premium Loan (APL) provided by the insurance company are charged exorbitant interest rate ranging from 7% - 8%. While banks are charging much lower interest rates and the fixed deposit return interest has been slashed down to 2-3%, but insurance companies seemed to exploit policyholders with high policy loan/APL interest rates.”

Many will eventually surrender or lapse their policies as the premiums are getting too hush to sustain their policies. It will be not prudent for policy holders to surrender or lapse at the expense of their savings and much needed financial protection especially medical coverage at the time of need.

Insurance Growth - Against the backdrop of these unprecedented economic circumstances affecting all Malaysians, the life insurance industry recording is a strong growth in Q3 2020 registering 44% increase in total new business premiums totalling RM2.92B as compared to Q2 2020, on the other hand the timing of repricing will have an adverse effect on the millions of policyholders.

Fomca strongly suggest that the repricing of the medical cards should be halted for at least the next couple of years. Fomca also urges Bank Negara Malaysia (BNM) to intervene immediately by protecting consumers by instructing the insurance companies to halt the premium hike and insist that there should not be any premium repricing for the next few years until we see better economic times.