KUALA LUMPUR, Sept 13 — Two senior citizens in their mid-60s have complained about a steep hike of their medical insurance premiums at 275 per cent and 72 per cent respectively.
In a letter to The Star published yesterday, Tony Pereira said he recently received a letter from his insurance company informing him that his medical insurance premium would increase from RM540 to RM2,030 monthly, a 275 per cent rise, due to him reaching the age of 65 and a “significant” rise in the cost of medical treatments.
Pereira claimed that when he took up his insurance policy 14 years ago in 2010, at age 51, his insurance agent did not warn him to expect such an increase in his premiums after retirement.
“I was advised that if I did not agree to the increase, my premium would be buoyed for some months by the investment within the policy. After this, the policy would lapse and I would not have medical insurance anymore,” said Pereira, who lives in Petaling Jaya, Selangor.
He said the customer service representative who attended to him had told him that he should have taken out insurance at a much younger age.
However, this week, Pereira received an email from another insurance company stating that his son’s monthly medical insurance premium would be raised by 30 per cent, just two years after Pereira took out the policy for his son at age 18. The insurer cited medical inflation.
“At the point when I am a retiree, I am facing a 30 per cent increase for my son and a 275 per cent increase for myself in premium rates,” Pereira said.
“These levels of increases are unfair. In fact, they are punitive. When we most need medical coverage and when we no longer have a regular stream of income, that is when the insurance company hits us. I wonder what Bank Negara Malaysia (BNM) is doing to protect the public.
“The excuse used by insurance companies is that they are facing significant increases in the value of claims. Yet, when I look at their profit and loss (P&L) accounts, they look very healthy. And I am not surprised. If customers have to face the increases that I have quoted, it is no wonder that the companies’ P&Ls look healthy – maybe too healthy.”
Pereira told BNM, as the regulator of the insurance industry, to protect consumers, describing the situation as being “out of control”.
In another letter to The Star published today, Pauline Chia, a 65-year-old woman from Cheras, Kuala Lumpur, complained about facing a 72 per cent hike in her annual medical insurance premium.
“The revised premium for 66 years old was RM7,795, but what I got was RM13,407, which is simply exorbitant!”
Chia wrote that her insurer had cited the high cost of medical treatment, the current economic situation, and a large volume of claims as justification for the premium increase.
She pointed out that throughout more than a decade of coverage, she only made a claim once – this year for an RM5,000 daycare procedure.
“But because of the portfolio of claims, people like me have also been affected,” Chia said.
“It’s ironic that when one might most need medical insurance, the insurance company makes it unaffordable. No wonder public hospitals are overflowing and the wait for medical treatment is very long and exhausting. And private hospitals are charging patients an arm and a leg.”
She also said health insurance premiums remained “very high”, despite copayments mandated by the central bank. Since last September 1, BNM has made it compulsory for insurers to offer consumers an option to purchase medical and health insurance and takaful (MHIT) products with a minimum 5 per cent copay feature.
The design of any new medical or health insurance products must also include the minimum 5 per cent copay. The definition of “new product” includes “any changes to benefits and limits, including via rider add-ons, of any existing product as at 29 February 2024.”
In a statement last July 6, BNM said it would not cap copayments in health insurance, but simply leave it to insurance companies to determine the maximum limits.
The central bank noted that Malaysia recorded medical inflation at 12.6 per cent last year, significantly higher than the 5.6 per cent global average.
BNM also said its copayment mandate was intended to control the “over-consumption of health services”.
The insurance and private hospital industries have blamed each other for the rising cost of health care. The Life Insurance Association of Malaysia (LIAM) accuses private hospitals of overcharging and issuing long and inscrutable hospital bills. However, the Association of Private Hospitals Malaysia (APHM) says private hospitals bear a lot of expenses beyond medical consumables and rely only on one source of revenue, unlike insurance companies with numerous revenue lines.
Just like how BNM appears to shift the burden of managing medical inflation from the insurance industry to consumers, the Ministry of Health (MOH) similarly has yet to make a policy decision on whether to regulate private hospital charges beyond doctors’ fees that are currently regulated under the Private Healthcare Facilities and Services Act 1998.
Although both LIAM and APHM claim that the costs to insurance companies and private hospitals are unsustainable, large businesses in both industries have recorded huge and increased profits this year.
IHH Healthcare Berhad – which operates a network of private hospitals, including Gleneagles, Pantai, and Prince Court, among others – recorded a net profit of RM623 million for the second quarter this year, more than double from a year earlier.
According to unaudited condensed interim financial statements, insurer AIA Berhad recorded the Group’s profit after tax of about RM1.1 billion for the six months ended June 30, about 33 per cent higher than the same period last year.
