Maybank - Deferred Annuity

Malayan Banking Bhd (Maybank) has expanded into the deferred annuity market through its “Smart Retirement Xtra” (SMX) plan, the first deferred annuity insurance plan in Malaysia through the Bancassurance channel.

“The SRX completes Maybank’s range of retirement plans and expands Maybank’s portfolio of life insurance offerings, which currently include endowment, investment-linked, general life and takaful life insurance products,” the bank said in a statement today.

 

Targeting to generate RM48 million in premiums this year, SRX aims to tap the potential of the life insurance market in Malaysia, which currently has a penetration rate of 41.22 per cent, it said.

SRX is designed to enable customers to plan for their future retirement, while benefiting from the special tax relief offered for the purchase of such plans. 

MCIS Remarry Sanlam

Sanlam Emerging Markets, a unit of South African insurance company Sanlam Ltd., said it’s buying 51 percent of Malaysia’s MCIS Zurich Insurance Berhad for about 1.25 billion rand ($118.4 million).

 

Sanlam will first buy a 40 percent stake in MCIS Zurich from shareholder Koperasi MCIS Berhad and then make an offer to acquire 11 percent from minority investors, the Cape Town-based company said in a statement today. Should there be a lack of interest in the offer from minorities, Sanlam will go back to Koperasi to make up the difference, it said.

Zurich Divorces MCIS

Zurich Asia Holdings Ltd, a wholly-owned subsidiary of Zurich Insurance Group Ltd, has entered into an unconditional agreement to sell its entire stake of 40,113,628 ordinary shares in Malaysian insurer MCIS Zurich Insurance Bhd (MCISZ) to Koperasi MCIS Bhd.

The stake represents 40% of the total issued and paid-up share capital of MCISZ, said Zurich Insurance Group in a statement released in Hong Kong today.

Upon completion of the sale, which is expected to take place on May 5, the gross sale proceeds to be realised by Zurich will be RM304 million (about US$93 million), it said.

“The disposal of our stake in MCISZ will satisfy the commitment made to Bank Negara Malaysia to rationalise our holding in two licences, following our acquisition of Malaysian Assurance Alliance Bhd (MAA),” said Geoff Riddell, Zurich’s chairman for Asia Pacific, Middle East and Africa.

In addition, it allows the company to focus exclusively on the development of its wholly-owned subsidiary Zurich Insurance Malaysia and resolves any customer confusion arising from the fact that the Zurich brand has been carried, since the middle of 2012, by two separate companies.

In 2011, Zurich acquired 100% of the total issued and paid-up share capital of the life and general insurer MAA and subsequently renamed it Zurich Insurance Malaysia Bhd in 2012.

The acquisition combined MAA’s strong local heritage and market position with Zurich’s global insurance expertise.

“Through Zurich Insurance Malaysia, we are well placed to capture growth in both the life and general insurance segments of the market and this move will further strengthen the growth prospects of these businesses over the long term,” he said.

Folllowing thwe successful completion of the transaction, MCISZ will no longer be a member of, or associated with, Zurich Insurance Group.

Zurich Insurance Group is a leading multi-line insurer that serves its customers in global and local markets.

Increased Premium - High Blood Pressure

Insurance agents have called on the central bank to put a stop to “unjustifiable hikes”.
They are concerned that policyholders could lose their coverage if insurance charges and premiums continue to rise with medical inflation.

A 25-year industry veteran said Bank Negara, together with all stakeholders, should address the issue of rising medical costs or the country could end up with a “major social problem” soon. For now, you may only be paying RM8 or RM10 more in monthly premiums but what about six months down the road if there’s another hike? 

If nothing is done to curb rising insurance policy prices, government hospitals will find it hard to cope as the uninsured cannot afford private care,” she said.

A senior insurance agency manager, who declined to be named, said the 10% to 20% (depending on the policyholder’s age) rise in premiums had been taking place industry-wide. The pinch would be felt by those aged 38 and above, with senior citizens “quite possibly” paying over RM100 more monthly, he said.

“Traditionally, the increase would only be for upgraded products but lately, insurance companies have started increasing charges and premiums on existing policies,” the manager said.

“This means that the policyholder has no choice but to fork out the extra or risk losing their coverage. Senior citizens and pensioners would suffer the most because if they cannot afford to pay more, they will have to look for a new policy which, at that age, would be very expensive, if not difficult.”

An agency manager with another insurance firm said those in their 20s need not worry “but once you hit 30”, be prepared for yearly premium rises of between 5% and 10%.

He said some insurance companies increased their product premiums because the medical cards were making losses.

Meanwhile, another agent said it was unfair for insurance companies to increase fees across the board when only one or two plans were making losses. “Overall, they are still raking in good profits so, these hikes are meant to prevent their profit margin from shrinking – it is not a question of loss or profit.

“We have been warned to expect hikes every two to three years, depending on the claims made,” he said. “I do not know how to face my clients.”

According to the Life Insurance Association of Malaysia 2013 annual report, the year’s new business total premium was RM8.19bil, while the total premium for in-force policies amounted to RM28.3bil, a growth of 12.8%.

Claims paid out last year amounted to RM6.9bil.

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.

Medical Premium Increased

Faced with higher claims from rising medical costs, many insurance companies have increased their charges and premiums by up to 20%.

National Association of Malaysian Life Insurance Field Force and Advisers (Namlifa) said most companies had adjusted their charges and premiums for medical, health and investment-linked policies over the last few months to cope with medical inflation.

Some companies are offering policy upgrades and at the same time increasing premiums while others just raise the existing policy charges and premiums adding that insurance companies only needed to issue a 30-day written notice to policyholders for the hike to take effect.

Policyholders must comply with the new rates or risk their policy lapsing. Namlifa admitted that agents have a tough time explaining the increases and had a duty to protect the welfare of its 12,000 members and policyholders.

Prudential Assurance Malaysia Berhad (PAMB) recently notified its policyholders that the PRUmajor med plans (PMM) premiums and charges would be increased effective from the individual’s policy anniversary date. PMM is a medical and hospitalisation rider that is attached to investment-linked insurance plans (known as PRUlink plans) offered by PAMB.

PAMB CEO Philip Seah said only those with a PMM plan attached to their investment-linked policies were included in the revision. He said the percentage of increase varied from individual to individual, depending on the type of plan. Any revision was only made after taking into consideration the rising costs and frequency of people seeking treatment. This was to ensure that policyholders continued to enjoy medical coverage in the long run.

“We’ve increased the lifetime limit of all PMM plans to ensure that policyholders are able to cope with rising medical inflation,” he said, adding that medical inflation in Malaysia was currently about 10% yearly and projected to continue rising.

In December, the Government allowed a maximum 14.4% rise in private medical fees – almost half of the 30% requested by the Malaysian Medical Association (MMA).

General Insurance Association of Malaysia (PIAM) chairman Chua Seck Guan said medical and health insurance, which accounted for RM920mil of the sector’s total market share last year, was projected to grow as demand in the healthcare sector increased in line with the country’s development as a medical hub.

MMA president Datuk Dr N.K.S. Tharmaseelan said insurance companies should control wasteful expenditure by hospitals instead of increasing premiums. They should also be “eagle-eyed” when presented with hospital bills and speak up when they are overcharged.

“(Instead) they take the easy way out by arm-twisting doctors to lower their fees,” he said. Fomca secretary-general Datuk Paul Selvaraj said insurance companies should not hold consumers to ransom because health insurance was a necessity.

“Any increase should only be on new or upgraded policies and policyholders must be given an option whether or not they want the extra benefits. If they are happy with the present coverage, insurance companies should not force them to pay more,” he said.

Increasing Cost Of health care

If you’re a Malaysian and in need of medical treatment, it will feel as if your options are dismal.

While public healthcare is generally cheap, the waiting line for it can make a big difference to your condition and comfort. The truth is; there are just too many people for the hospitals to cope.

If you decide to go with private healthcare, the exorbitant prices have pushed many families to go into debt. With the amendment to the Private Healthcare Facilities and Services Act 1998, medical fees have now been further increased. While this is a good thing for doctors in the profession who haven’t seen an increase in the past 12 years, to the rest of the public it’s a bigger burden few can carry.

Rising medical costs
One woman shared her story to The Star newspaper on how her family had to pay almost RM60,000 in medical expenses for their 87-year-old mother who was hospitalised in a private hospital for 35 days. Their mother was in the Critical Care Unit for a week, was moved to a single-bed room and did not have any surgery, yet the bill was crazily high and the details on the bill were vague. The worse was when she was told they were charged RM85 for any doctor who came to visit their mother even when it was supposed to be a routine check-up. This also included a nutritionist which the woman found unnecessary as her mother didn’t really need one. Even a nurse’s visit would be charged, especially if their mother rang the nurse’s bell after 9.30pm.

And therein lies the problem with many private healthcare institutions. The lack of clarity on how they charge their patients and the high costs for a lot of their services has caused many patients and their families to struggle even more after getting the medical care they need. There are even cases where those in need of treatment opt out instead as they do not wish to burden their families even further with the costs and even debt they may fall into. And this almost always leads to an early death.

With the new increase in place, consumers will be seeing their bills rise even more. Consultation fees at private hospitals are up by 200%, with the usual RM10-RM35 now up to RM30-RM125. A visit to a specialist will now cost anywhere between RM80-RM235, previously it ranged between RM60-RM180. A medical examination now would cost RM45-RM230. If a pregnant woman requires caesarean section, she will be charged RM2,719 now, an increase from RM2,365 before. A lot of these increases range between 14% to up to 33.3%

That’s not the only cost to look out for when it comes to hospitalisation, for while the prices of other medical costs such as medical equipment used and even medication remain the same, they have and remain as expensive as they have always been.

The painful truth
There doesn’t seem to be much respite for those who are in need of or will need medical assistance. Insurance premiums will also be increased for these new medical policies, and some even predict that employers may cut down on medical benefits as well. In the meantime, Health Minister Dr S Subramaniam insists that the medical fee hike is meant to protect the people and that consumers could still dictate the fees in the private medical industry by choosing practitioners with lower charges. Other doctors find the price hike too little, especially since it had been 12 years since the last hike. It would appear that the excuse “we haven’t raised rates in many years” is fair game across any industry now seeking to cash in and further strangle the finances of the average Malaysian.

Despite the many assurances from doctors and other medical practitioners that the price hike is for the best, its heartaches all around for the rest of Malaysia which no medication can cure. As the cost of living continues to soar, it appears that even the cost of staying alive shows little mercy during these tough times.