Malaysian Braces For Medical Premium Hike

Insurance companies are considering to raise medical insurance prices in 2021. A hike on premiums by most insurance companies was supposed to take place in 2020, but they decided to defer it to 2021 in light of the Covid-19 pandemic.

Federation of Malaysian Consumers Associations (Fomca) says this is still too soon, as many are still grappling with financial constraints and uncertainty. It recommend the price increase should take effect in 2023.

The call to delay the price hike has been backed by the National Association of Malaysian Life Insurance and Family Takaful Advisors (Namlifa). Both Fomca and Namlifa have also previously called on Bank Negara Malaysia to intervene and protect consumers.

The amount of price increase is dependent on the various insurers and takaful operators (ITOs) and policyholders, ranging from 5% to 40% per policyholder. It’s not set as a standard across the board. It is anticipated that older policyholders suffer higher increases compared to the younger ones.

Bank Negara tells Sunday Star it has been engaging key stakeholders to manage the medical insurance repricing. BN recognises the challenges faced by many Malaysians arising from the pandemic. But it points out that insurance industry players have introduced steps to preserve protection coverage for policyholders with financial difficulties.

This includes temporary premium or contribution deferment, interest-free installment payments, or the ability to switch to an alternative plan with no additional underwriting requirements. These flexibilities have provided financial relief to almost 60,000 affected policyholders and takaful participants, who opted to defer their premium payments by three months, totaling more than RM74mil collectively.

The bank urges policyholders or takaful participants to contact their respective ITOs or agents to find out about the options available that best meet their needs. It’s important to note that for medical and health insurance and takaful (MHIT) products, premiums and contribution adjustments are highly impacted by medical cost inflation.

BN highlights that MHIT claims grew at a faster rate of 11.6% a year compared to the MHIT premium of 9.5% yearly between 2016 and 2019, based on its 2019 annual report. This trend, coupled with the rising cost of private medical care in Malaysia, which is reported to be among the highest in South-East Asia and above global average, continually puts pressure on the pricing of MHIT products. It also puts stress on the long-term affordability of private healthcare services in Malaysia.

More Scams During Covid

A mobile app specialising in blocking unwanted calls, recently released its latest insights on the trend of spam calls in Malaysia. Based on their findings, spam calls from financial services increased by 95% while those from insurance companies increased by 50% in the past year.

Malaysia also saw a slight increase of 2.7% in total spam calls in 2020 compared to the previous year. The Swedish company also stated that 97% of spam calls in Malaysia were made from domestic numbers.

Based on their data, 41% of spam calls in Malaysia were made by financial services while 24% were from scammers. This was followed by insurance related spam calls which made up 15% of all calls.

The biggest decrease in spam calls occurred in March and April, which was the period in time when the Movement Control Order (MCO) was implemented. In March, the volume of spam calls dropped to just over 6 million and it dropped even further down to just over 2 million in April. This was probably due to limited access to certain equipment and technologies for both telemarketers and scammers.

This brief respite was not meant to last as spam activity increased again from the month of May and June as lockdown measures eased. Now, towards the end of 2020 it looks like it is business as usual for scammers as the numbers returned to the same levels at the beginning of the year.

The vast majority of fraudster like to prey on the elderly, children and housewives. Scammers are also known to exploit these group of people by claiming to be their loved ones or authority figures like the Inland Revenue Board (IRB) or police.

Last year Malaysia had the dubious honour of being ranked number 19 on the list but it looks like things have slightly improved as it is no longer listed among the top 20.

Insurance Covers Covid test

The surance and takaful industry has broadened their eligibility criteria of the Covid-19 Test Fund (CTF) to include asymptomatic patients effective today to encourage them to get tested and curb the spread of the virus. The CTF reimbursement is limited to one test per policy or certificate holder only and it is valid until June 31, 2021. 

In a joint statement, Life Insurance Association of Malaysia (LIAM), Persatuan Insurans Am Malaysia (PIAM) and Malaysian Takaful Association (MTA) said all policy or certificate holder who are asymptomatic can claim from the CTF for the Covid-19 test performed at any authorised labs or medical facility under the Ministry of Health (MOH).

The CTF is a RM8 million fund set up by the industry to back the government’s efforts in conducting more screening for the virus. The fund will provide a fixed cash reimbursement for the cost of Covid-19 testing for individuals covered under individual or group Medical and Health Insurance policies or takaful certificates (MHIT) . 

For asymptomatic individuals, MHIT policy or certificate holders can reimburse up to RM100 per test for Reverse Transcriptase – Polymerase Chain Reaction (RT-PCR) or up to RM50 for Rapid Test Antigen (RTK-Ag).

Meanwhile, group MHIT policy or certificate holders, limited to 50 employees per policy, can claim up to RM50 per test for RT-PCR and RTK-Ag. Under the CTF, persons under investigation and individuals who require emergency or semi emergency surgery are eligible to reimburse up to RM300 per test for RT-PCR. Hospital admissions for non-emergency and non semi emergency surgery can claim up to RM100 per test for RT-PCR and RM50 per test for RTK-Ag.

Digital Platform Disrupting Insurance Industry

The growing use of e-commerce and digital wallet apps in emerging markets such as India, Indonesia and Malaysia represents an opportunity for re/insurers to make progress in closing protection gaps. Supportive government policies and a COVID-enforced spike in digital activity have increasingly pushed consumers online this year, with 68% of respondents in these three countries using digital platforms at least once per week.

Of the 1,800 respondents to the survey, an average of 70% expressed interest in using online channels to purchase insurance. Among the different types of digital platforms, consumers in India and Indonesia showed a stronger preference towards purchasing insurance through digital wallet platforms, such as Google Pay in India, OVO in Indonesia, while Malaysians prefer to purchase from bank or insurer websites or apps.

Health and safety measures intended for curbing the spread of COVID-19 have now driven a clear paradigm shift towards digitalisation in the post-virus era. With an increasing number of digital platforms extending their business reach into financial services, insurers need to adapt their business models to become more relevant and responsive to the latest customer needs.

Partnering and working with digital platforms and ecosystems will give insurers access to millions of consumers that are often under-protected, especially in markets across Southeast Asia. In particular, the reinsurer noted potential benefits in life and health insurance, which could leverage data from platforms such as health tracking apps.

Meanwhile, digital platforms could benefit from business diversification and stronger customer loyalty by offering financial services online.

It will be a priority for insurers to carefully calibrate their digital strategies to capitalise on the opportunities offered by digital platforms. Leveraging on underwriting expertise and risk management experience, insurers and platform partners can not only learn but also apply their consumer insights to enable more customers to narrow their protection gaps.

Indonesia OVO Tie-up With ZhongAn

Indonesian mobile wallet Ovo and ZA Tech, a joint venture of ZhongAn and SoftBank’s Vision Fund 1, have teamed up to create an insurtech platform, Ovo announced on Tuesday through its holding company PT Bumi Cakrawala Perkasa (BCP).

Ovo said that the new service will be ready next year and that it will draw on ZA Tech’s proprietary technology and applications. Insurers can make their digitized products available on the Ovo app. The joint venture will certainly support the rise of insurance aggregators or marketplaces.

Insurance penetration is very low in Indonesia, it only reached 2.77% in 2018 according to the General Insurance Association of Indonesia (AAUI). However, the COVID-19 pandemic has led to a rapid rise in demand for protection, showing there is a vast potential growth in Southeast Asia’s largest economy.

The new alliance is in line with Ovo’s plan to further strengthen its proposition in digital insurance. This startup wants to provide the most comprehensive suite of financial services to all Indonesians through additional insurance and investment offerings. In May, Ovo launched online insurance products in collaboration with Prudential Indonesia.

Hong Kong Investment Scam

The Hong Kong police have announced that they have arrested 24 people, including 11 insurance agents, in connection with an HK$475m ($61m) investment scam.

Around 260 victims, aged between 24 and 77, had invested in a fund which the alleged scammers claimed was set up by a "renowned international insurance group". The individuals reported losses of between HK$200,000 and HK$20m each. Most of the victims are from mainland China.

The scam took place from 2013 to 2018 when investors in the fund discovered that its value had plunged by over 90%. The fund was liquidated in February 2019. The fund was listed on a platform run by an international insurance company.

It is understood that the fund involved is the “Worldwide Opportunities Fund SPC – Hong Kong Investment Fund SP” (HKIF), a fund managed by CES Capital International (Cayman). It is one of several assets which policyholders of a non-guaranteed investment-linked life insurance product, distributed predominantly by independent brokers, can choose independently to invest in.

The police began investigating the syndicate after police started receiving reports from the insurance company and the victims from January last year.

During the 22-month investigation by the police of the case, around HK$420m worth of assets, including cash of over HK$50m and real estate valued at around HK$370m, are frozen. Those arrested face money laundering and fraud charges.

Indonesia General Insurance Agent Code Of Practice

The Indonesian General Insurance Association (AAUI) released a standard code of practice for general insurance agents. This is set out in “Standards of Practice and Code of Ethics for Indonesian General Insurance Agents.

AAUI executive director Dody Dalimunthe explained the standards and code are drawn up in fulfilment of the insurance law and as a guide for AAUI members in carrying out insurance distribution and in working with general insurance agents. This issuance is to standardise rules of conduct and ethics for general insurance agents who have an agency agreement with an insurance company that is an AAUI member.

AAUI deputy chairperson for the agency sector, Mr Bambang S Soekarno, added that one of the important points stipulated in this code of conduct is that an insurance agent is not allowed to be tied to more than one insurance company.

Insurance agents must be registered with the Financial Services Authority (OJK), and the AAUI is authorised by the OJK to register general insurance agents. The insurance agent must submit a registration application to the Association.