Medical Insurance - Malaysia

With a heavily subsidised healthcare system in Malaysia, it is safe to say that the average Malaysian is greatly aided in their search for medical attention and medication.

However, this comes at a cost to our healthcare system, and that cost has to be borne by someone, in our case ourselves – through taxes, personal out-of-pocket expenses and our insurance companies.

Currently, our healthcare expenditures are consuming an ever increasing portion of our gross domestic product (GDP). Standing at 4.4 per cent of GDP or RM50.3 billion in most recent figures, 52.4 per cent of our current healthcare expenditure is being funded by the Ministry of Health (MoH), followed by private household out-of-pocket (OPP), private insurance, and all other federal agencies and ministries.

When compared to other universal healthcare nations like Japan and Canada, our expenditure of healthcare seems fairly moderate as they each spend 10.2 and 11.03 per cent of their GDPs respectively on healthcare, albeit at higher government funding rate of around 80 per cent.

However, in the long-term, analysts expect our healthcare expenditure to rise dramatically because of our aging population, higher life expectancy and rising lifestyle diseases, shifting a majority of the population to require more medical treatment than before.

During the 2010 to 2040 period, the Malaysian population aged over 65 and over will increase to more than three-fold its 2010 population. This increase will categorise Malaysia as an aging population society by 2021, when our aged 65 years and above population will reach 7.1 per cent of our entire population.

Lifestyle diseases are also on the rise as more Malaysians are dying prematurely due to increased incidents of non-communicable disease (NCDs) arising from poor lifestyles. For example, of the 10 causes of premature death in Malaysia, a large majority are NCDs who have seen large increases of proportion in 2016 from 2005.

Diseases related to blocked arteries and mini strokes saw 36.4 and 20 per cent increase in changes from 2005 to 2016, while diseases known to have strong links to overconsumption of sugar like Diabetes, and chronic kidney disease saw a 37.1 and 28.0 per cent increase.

The predicted rise of healthcare expenditure is not new news as hospitals all around Malaysia have found themselves strained from a lack of resources in both labour and medicine as they try to serve the ever going number of patients.

This has caused much concern as it would be a daunting task for us to overcome if our healthcare expenditure exceeds sustainable levels.

In response to our rising medical expenditure, both the public and private sector have taken steps to curb unsustainable increases.

 Public sector: More awareness needed - In the public sector, public health awareness campaigns are often the first sign of attack when tackling the issue of rising medical expenditure and rising number of diseases, and with good reason.

It is understood that public healthcare awareness is an effective tool in helping maintain the health in a population and is extremely applicable to us locally as statistics from Healthdata indicate found that are top risk factors in Malaysia that drive the most death and disability are dietary risks, high pressure, tobacco usage, high blood sugar, obesity, high cholesterol and alcohol and drug use.

Essentially, it seems that most of our problems stem from poor lifestyle choices such as diets rich in fat, sugar and salt; tobacco, alcohol and drug usage; and a sedentary lifestyle.

In response, the public sector has continually pushed for more publc health awareness initiatives in order curb these associated diseases and its related costs to medical spending.

In particular, its national community health empowerment programme (KOSPEN) is expected to see a further RM30 million budget allocation this year in order to help it achieve its goals.

Screening programs such as those for cancer can help catch the illness early and reduce the need for expensive and costly treatments for later stages.

For example, vaccines and screening programs for cervical cancer can easily reduce the amount of cases of cervical cancer drastically by 75 per cent – allowing hospitals to utilise the funds that would have been sued to treat cervical cancer to be placed in other areas such as research or facility improvement.

Private sector taking more responsibility through healthcare and work - In a sector update by MIDF Amanah Investment Bank Bhd (MIDF Research), the bank explained that both the public and private healthcare sectors would undergo strategic partnerships to ensure that the increasing demand for primary healthcare services can be met by the private sector while public hospitals would concentrate on more complex cases.

“Additionally, urbanisation and increasing standards of living are also expected to be a key driver for increasing demand of private healthcare as majority of private healthcare providers are based in urban areas which would make them attractive and viable options for the increasing number of population moving to the city,” added the bank.

While the shift is expected to make healthcare costs more sustainable as there would be less drain on public health resources, it still doesn’t address the larger picture of how we can reduce our unsustainable healthcare spending.

In fact, it has been suggested that private company employers should step up and take responsibility in helping create a healthier workforce and in turn a healthier population, AIA Bhd (AIA) has been championing this new movement that emphasises prevention over treatment.

Commissioning the first ever comprehensive science-backed workplace survey in Malaysia earlier this year in whicha  total of 47 companies of various sizes participated, AIA found that the average annual cost of health-related absence and presenteeism (working while sick) per organisation in Malaysia is estimated to be a shocking RM2.7 million.

According to AIA, this was a large concern as employees often times found themselves feeling obligated to work while under the weather due to workplace policies used to manage absenteeism and Malaysian corporate culture.

Speaking at the opening of Malaysia’s Healthiest Workplace Summit held at the Hilton Kuala Lumpur today, AIA Malaysia’s Chief Executive Officer Anusha Thavarajah said it was high time for employers to take a closer look at the health and wellbeing of their people, especially given that working Malaysians spend most of their waking hours at work.

“There has been little focus on the role of employers in championing good health at the workplace so far. As the country’s leading provider of employee benefits schemes, AIA believes that this survey serves as a fantastic platform that will not only help to promote awareness on the importance of workplace health and wellbeing among employers and employees, but will also enable and encourage constructive discussions and actions around this increasingly important topic. After all, having a healthy workforce is good for business,” she added.

Adding to the argument of the need of a healthy workforce, AIA’s study also showcased that Malaysian employees reported more health risks than their peers in the other 3 countries, due to behaviours and factors such as poor nutrition, physical inactivity, long hours spent at work, a lack of sleep and stress.

Of the employees surveyed, AIA found that 90 per cent do not have a balanced diet, 64 per cent reported being physically inactive where they remain sedentary throughout most of their working hours, 56 per cent sleep less than seven hours a night with 67 per cent reporting at least one sleep problem, 53 per cent have at least one dimension of work-related stress and 12 per cent experience high levels of anxiety or depressive symptoms.

Malaysians also work the longest hours – on average 15 hours more than their contracted hours each week, compared to employees in Singapore, Hong Kong and Australia.

However, it is not all gloom and doom as the survey also found that Malaysian employees were very motivated to change their lifestyles – 90 per cent indicated they want to lose weight, while 65 per cent were eager to improve their levels of physical activity.

Associate Professor Dr Wee Lei Hum from the Faculty of Health Sciences at Universiti Kebangsaan Malaysia, the local academic partner on the study, said employers have a huge role to play in enabling employees to act on their motivation to change.

“The key to successful behavioural change is through the promotion of health and wellness strategies in the workplace and making sure that they are ingrained in the organisational culture. This can only be achieved with strong support from employers,” she said.

Echoing her sentiment, Anusha said the Malaysia’s Healthiest Workplace by AIA Vitality survey was designed to be a catalyst to get employers to place employee health and wellbeing at the centre of their corporate strategy.

“Armed with insights and data on their employees’ health and wellbeing, companies can now pursue proactive interventions that can affect positive behavioural change among their people.

“Over time, we believe that these interventions will help companies provide better workplaces to attract and retain people, improve employee engagement and ultimately increase business productivity. It will be a win for the employee, a win for the employer and a win for Malaysia,” she remarked.

What else can be done? - Instead of just looking at what the government or private sector players can do, we should also look towards lawmakers to better the industry.

According a report by the World Health Organisations (WHO), the ‘best buy’ or highly cost-effective interventions for NCDs that a nation can incorporate are tobacco and alcohol legislation, reduction of salt and sugar in foods, and encouragement of physical activity.

Our neighbour Singapore in particular is a good example of how these actions have helped them as their heavy taxes on tobacco and alcohol products in conjunction with their continuous initiatives to motivate citizens to be active has shown a vastly different scenario than the one seen in Malaysia.

Public Sector Expenditure by Providers of Health Services 2013

Besides boasting a longer life span compared to the average Malaysian, data from Institute of Health Metric and Evaluation has also shown that the risk of Singaporeans dying or being disabled from dietary risks, tobacco usage, and high cholesterol has actually gone down when comparing figures form 2005 to 2016.

In comparison, Malaysians saw a 30.1 per cent increase in dietary risks, 26.6 per cent in tobacco and 33.3 per cent increase in high cholesterol. Despite already being an ageing nation, Singapore only utilises 4.9 per cent of their GDP in healthcare expenditure, at 4.4 per cent, Malaysia is not too far behind.

While we’ve explored some of the many ways we can attempt to offset our total medical expenditure, Ramzi Toubassy, the vice-president of the Life Insurance Association of Malaysia reckoned that they may help improve the situation – but not solve it.

“The only way this is going to work is when all insurance companies and hospitals get together and work on a scheme to help the public. From our side, of course it is to our benefit to insure as many people as possible, but if medical expenditure continues to go up, it is not good for us either.

“So we will continue trying to find a way where hospitals can work with us together for the benefit of the public and not for the benefit of making profit, and as long as this is not happening, the situation will not improve much.”

Malaysia 3 Top Insurers

In June, Bank Negara Malaysia reinforced the requirement that foreign insurers must have local shareholding of at least 30%. The enforcement of this requirement could lead to a spate of merger-and-acquisition activities in the insurance sector. Apart from selling stakes to local strategic shareholders to meet the requirement, we think foreign insurers may pursue the initial public offering option.

For the sector as a whole, we are positive about the listing of any foreign insurers, especially the three big players, on Bursa Malaysia as this would significantly expand the size of the insurance sector. However, we think this would be negative for existing insurance stocks as their liquidity could be drained as a result. (This report is purely a scenario analysis to explore the idea of major foreign life insurers’ listing on the Malaysian equity market. So far, there has been no indication that any of these companies intends to go public.)

There are a total of 23 general insurers and 14 life insurers in Malaysia. Market share is more evenly distributed in the general insurance segment in terms of 2016 annualised gross earned premium, with local players comprising 52.1% and foreign players accounting for 47.9%. However, foreign names dominate the life insurance sector, with total market share of 81.7% in 2016 versus the 18.3% of local insurers.

The Malaysian life insurance sector is dominated by three major foreign players — AIA Bhd, Great Eastern Malaysia and Prudential Malaysia, which have a combined market share of 66.7% (in terms of gross earned premium). For this reason, we think these companies would attract keen interest from investors if they list on the Malaysian equity market (at reasonable valuations).

Iron Rod For Rapist

A Barisan Nasional lawmaker is suggesting that perpetrators of sexual crimes against children, especially incest, should be branded with a hot iron. “May I suggest that the man who does such a thing ... we take a hot iron rod and brand him so he feels the pain and suffering of the victim,” said Ahmad Lai during the question and answer session in Parliament on Thursday.

However, Deputy Women, Family and Community Development Minister Datuk Azizah Dun did not respond to the suggestion as the Dewan Rakyat Deputy Speaker Datuk Seri Ismail Mohamad Said moved on to the next question.

50% Malaysian Not Financial Ready

More than 50% of Malaysians may not be financially ready for retirement, according to the Credit Counselling and Debt Management Agency (AKPK). To help lessen this number, AKPK yesterday launched a new mobile app called Financial Insight.

AKPK CEO Azaddin Ngah Tasir said its study, conducted last August on 1,000 Malaysians aged 18 to 55, showed that although most of the respondents had set aside a portion of their monthly income as savings, one in five was saving less than 10% of their monthly salaries.

The survey helped AKPK create the mobile app. The Sun daily quoted Azaddin as saying: “People are saving, but not enough. This is because a lot of people, especially the young adults, do not think about retirement. And based on the (monthly) income that they have, there is only a certain amount that they can save.”

The app, which allows individuals to take a photo of themselves, will tabulate their financial health based on the inputs they provide and project the robustness of their financial standing with an image of the individual upon retirement.

For example, a user with better financial health will look younger than one who is financially burdened at the same age. The app will also provide tips for users if the results indicate a poor outlook on their retirement. The app will be available for download for free in mid-December for both iPhone and Android users.

Visa and AKPK hoped the mobile app would enable Malaysians to understand the importance of saving regularly, and be aware of the amount that they should set aside every month in order to be financially sufficient by the time they retire.

Meanwhile, Azaddin said since its inception in 2006 to Oct 31 this year, AKPK had counselled more than 648,295 people, with 14,973 cases, involving RM600.6 million, settled.

He was quoted as saying that AKPK’s statistics showed that 12.8% of its debt management programme customers were below the age of 30, 70.6% between 30 to 50 and 16.6% above 50 years old.

I Want To Hug You Outside Parliament

Pahang Menteri Besar Adnan Yaakob has apologised for challenging Mentakab DAP assemblyman Tengku Zulpuri Shah Raja Puji to a fight almost a week ago in the state assembly.

Admitting that he had been rude, Adnan directed his apology at Tengku Zulpuri, Tanah Rata assemblyman Leong Ngah Ngah and state speaker Ishak Muhammad, Sin Chew Daily reported today. He said as a Muslim and a law-abiding citizen, he should apologise for his previous behaviour.

On Nov 22, the Pahang state assembly sitting almost degenerated into a brawl after a heated exchange of words between Adnan and Tengku Zulpuri. It started after Tengku Zulpuri, who is also the de facto opposition leader, told the assembly that the recent floods in his constituency were due to drainage problems and had nothing to do with beer festivals.

Ignoring Adnan’s attempt to interrupt him, Tengku Zulpuri had said it was wrong to say that floods were divine retribution for beer festivals as floods had also recently happened in Jeddah, Saudi Arabia.

To this, Adnan had said: “We are talking about religion… I am upset because he insulted the religion, insulted Allah when he said there were floods in Jeddah although there was no beer festival.”

The two continued to argue and at one point, Adnan apparently challenged Tengku Zulpuri to a fight. Adnan reportedly said he was willing to create history by brawling in the legislative assembly.

Witnesses said after the speaker adjourned the proceedings, Adnan had also threatened to punch Tengku Zulpuri. Adnan reportedly directed harsh words at Leong the next day, also during the legislative assembly.

Adnan said his challenge to Tengku Zulpuri to “leave the chambers” was not necessarily an invitation to a physical fight outside the hall. He said they could also have had a discussion over tea and then hugged each other.

Both Tengku Zulpuri and Leong have accepted Adnan’s apology.

Convicted Adulterer - Shoot Drug Users

Bung Mokhtar Radin said Malaysia should emulate the stern policies initiated by the Philippine Government under President Rodrigo Duterte in its fight against drugs. The Kinabatangan Barisan Nasional lawmaker said this as he claimed that the National Anti-Drug Agency (AADK) has failed in its task.

Speaking while debating the Home Ministry's Budget 2018 allocation, Bung said that the AADK should be abolished as it is a waste of time and resources.

"The AADK has failed in carrying out their responsibility. Every year, there is an increased number of drug addicts although drugs are the country’s number one enemy. Why can’t we follow the Philippines? We could just detain the drug addicts without trial and shoot the drug dealers, so our country is free from them,” he said.

His remark appeared to stun the Opposition as several MPs got up and asked if he was being serious.

“I am very serious. I support this if it’s for the benefit of the country. We do not want a country filled with lifeless people,” he said.

The Philippine Drug War has been criticised locally and internationally for its summary executions which have caused thousands of deaths due to the police operations.

It was reported that more than 14,000 people have been killed in the drug war from the time the policy was put in place to March this year.

AXA Singapore Bully Agents

It is not uncommon for employers to require potential employees to provide references from their former employers. Indeed, such references may have a significant bearing on their chances of obtaining employment with a new employer. Therefore, it is important that an employer prepares such a reference in a fair and accurate manner in order to avoid unfairly prejudicing a former employee’s prospects of obtaining fresh employment. In this article we discuss the Singapore Court of Appeal’s (Singapore CA) decision in Ramesh s/o Krishnan v AXA Life Insurance Singapore Pte Ltd [2016] 4 SLR 1125 (Ramesh) which sets out helpful guidelines for employers to follow when preparing a reference for a former or present employee.

The facts of Ramesh were fairly straightforward. The appellant, Ramesh s/o Krishnan, was employed as a senior financial services director in the respondent, AXA Life Insurance Singapore Pte Ltd (AXA) where he led a group of advisors known as the “Ramesh Organisation”. The Respondent initially decided to terminate his services but allowed him to resign.

Ramesh then applied to join Prudential Assurance Company Singapore Pte Ltd (Prudential). As required under the regulatory framework of the financial advisory and insurance industry, Prudential sent a reference check request to AXA. Two weeks later, AXA provided a reference which suggested that the Ramesh Organisation had a low persistency ratio (i.e. its sales were of a poor quality because a high ratio indicated that many of the adviser’s clients have continued to maintain their policies during the relevant period of time), that Ramesh and 14 other advisers in the Ramesh Organisation had been investigated for compliance issues, and disciplinary actions had been taken against five advisers with three cases referred to the police for investigations.

Prudential then asked for further information from AXA such as the details of the investigations and how persistency ratios were calculated, but AXA did not provide most of the information requested save for some brief details of the internal investigation concerning Ramesh. In the interim, Prudential made a conditional job offer to Ramesh and applied for a license from the Monetary Authority of Singapore (MAS). A few months later, AXA wrote to Prudential, copying MAS, highlighting the Ramesh Organisation’s poor persistency ratio and possible ethical violations by advisers in the Ramesh Organisation. Two to three months later (which was longer than usual), MAS indicated that it was only prepared to issue a conditional licence. Prudential decided not to hire Ramesh. When Ramesh applied to join Tokio Marine Life Insurance (Tokio Marine), a similar reference was sent by AXA to Tokio Marine which subsequently led to a decision by Tokio Marine not to employ Ramesh.

Ramesh commenced action against AXA. First, the Singapore CA endorsed the Singapore High Court’s (Singapore HC) finding that employers do owe a duty of care to their employees (be it former or present) in the preparation of references. The Singapore CA added that it does not make a difference whether or not Ramesh was an agent rather than an employee as the factors that led to a finding that an employer owed its employee such a duty of care were also present in some principal-agent relationships such as in Ramesh.

Next, the Singapore CA defined the applicable standard of care, which is that an employer is obliged to exercise due care, when preparing a reference, to ensure that the facts stated therein are both true and accurate. This follows from the requirement that the reference, taken as a whole, must not be unfair or misleading. As the Singapore CA explained, an assertion consisting of facts that are true may not be accurate if it conveys a misleading impression because it fails to present the full picture. Therefore, although there is no requirement that an employer must disclose everything which it knows about the employee who is the subject of the reference, it is expected to disclose whatever is relevant and relates to information that has already been disclosed where withholding such information would render the disclosed information incomplete, inaccurate or unfair.

The Singapore CA distilled the following principles in formulating the applicable standard of care expected of an employer when writing a reference for its employee:

• The employer must exercise reasonable care to ensure that (i) the facts stated in the reference are true; and (ii) any opinions expressed are based on, and supported by verifiable facts.
• The employer must also exercise reasonable care to ensure that the reference does not give an unfair or misleading overall impression of the employee, even if the discrete pieces of information which it contains are factually correct. The information that is provided may be considered misleading or unfair where: (i) the information provided has gone through an unfair process of selection; or (ii) the manner in which the facts and opinions have been included gives rise to a false or mistaken impression in the mind of a reasonable recipient of the reference.
• The employer is required to exercise reasonable care to disclose any information that relates to information which has already been provided, where to withhold such further information would render the information that has been disclosed incomplete, inaccurate or unfair. This continues to be the case when the recipient of the reference seeks further information or clarification pertaining to what has been disclosed.
• Subject to the foregoing qualifications, the employer is not required to give a full and comprehensive reference or to include all material facts about the employee in the reference.
• In general, the employer should not include in the reference, whether explicitly or implicitly, complaints or other allegations against the employee where the employee had no knowledge of and had not been given an opportunity to explain or defend themselves against. In particular, complaints that were not conveyed to the employee because they were found to be baseless should not be disclosed unless the employer is, for some reason, obliged to do so. In such a case, the employer should make it explicit that (i) the complaint was dismissed as baseless; and (ii) the employee was not informed of it at that time. The employer should also inform the employee concurrently.
• In assessing what constitutes reasonable care, regard will be had to the gravity of any adverse suggestion or inference contained in the reference. The greater the gravity of any adverse suggestion or inference, the more closely will the employer’s conduct be scrutinised to ascertain whether it has taken reasonable care to ensure that the suggestion or inference in question: (i) is based on facts which are true and accurate; and (ii) is, in view of those facts, fair and reasonable.

On the facts on Ramesh, the Singapore CA held that AXA had breached its duty of care because it had given incomplete, misleading and inaccurate information to Prudential in relation to the persistency ratios, compliance issues and possible ethical violations by Ramesh and the other advisers in the Ramesh Organisation which caused Prudential not to employ Ramesh. Ramesh was ultimately awarded S$4 million in damages at the assessment of damages hearing in the Singapore HC.

Therefore, while employers are generally not obliged to provide a reference, where a reference is provided it would be prudent to follow the Singapore CA’s guidance on what constitutes a 'reasonable' reference.