Stop raising medical insurance premiums
PETAL JAYA: Insurance companies urged to stop raising medical insurance premiums.
The Federation of Malaysian Consumer Associations (Fomca) said this would impact the affordability of premiums for policyholders.
“Notices are being sent to policyholders at a time when consumers are still struggling to make ends meet, which is very unfair and unfair,” said Datuk chairman Dr Marimuthu Nadason (Photo) said in a statement today.
“Fomca is advocating for postponing the rollout of re-pricing by insurance companies, which was originally scheduled to take effect in 2020. However, due to the severe economic disruption caused by the pandemic, the one-year postponement does not leave enough respite for those insured who remain. overwhelmed by economic and employment uncertainties.
Marimuthu said hospital occupancy rates have dropped significantly due to Covid-19, so insurance companies will have a lower payment compared to previous years.
“It was also reported by the Association of Private Hospitals that private hospitals and clinics have experienced a decline of almost 70%, resulting in a healthier claims-to-loss ratio as well as improved overall profitability for insurers. “, did he declare.
“On top of that, with many job losses and wage cuts, it is both emotional and financial stress for policyholders to keep up with current premiums, what more could the insurance industry ask for. ‘Retarizing exercise, we are concerned that many policies surrendered or lapsed due to increased premiums.
He pointed out that in these difficult times many policyholders have reportedly taken out loans against insurance policies and are now under pressure to pay off loans, premiums and now rising premiums.
“The policy loan and automatic premium loan (APL) provided by the insurance company are charged at an exorbitant interest rate ranging from 7% to 8%,” he said.
“This is clearly unfair since banks are charging much lower interest rates and interest on term deposits has been reduced to 2-3%, but insurance companies seemed to be exploiting policyholders with low interest rates. ‘high interest on policy / APL loans. “
The president of Fomca said the federation expects many policyholders to lose their accumulated bonuses to be used to fund their policies through APLs or premium vacations.
“More seriously, many will end up surrendering or expiring their policies because the premiums become too discreet to maintain their policies. It will not be prudent for policyholders to surrender or lapse at the expense of their much-needed savings and financial protection, especially medical coverage when needed.
“Against the backdrop of these unprecedented economic circumstances affecting all Malaysians, the life insurance industry experiences strong growth in the third quarter of 2020, recording a 44% increase in total new business premiums totaling $ 2.92 billion. of RM compared to the second quarter of 2020, on the other hand the re-pricing schedule will have a negative effect on the millions of policyholders.
“With the current low occupancy of hospitals, insurance companies will not be spending huge sums of money on medical claims as the same scenario will be presented next year, so they should not re-price medical cards. “, he added.
Fomca also suggested that insurance companies reassess the mechanism used to streamline re-pricing to avoid the need for frequent re-pricing by adopting “average breakeven hitting threshold” instead of “breakeven hitting threshold,” the latter benefiting only insurance companies.
Second, the loss-to-loss ratio should encompass all medical cards as a basis of the total wallet instead of per series of medical cards as would currently be practiced, he said.
“Fomca strongly suggests that the re-pricing of medical cards be halted for at least the next two years and vehemently opposes its deployment,” Marimuthu said.
“Fomca also urges Bank Negara Malaysia (BNM) to step in immediately by protecting consumers by ordering insurance companies to halt premium hikes and insist there should be no re-pricing of premiums over the next few years until we see better economic times.
“On top of that, insurance companies can do their corporate social responsibility (CSR) to all policyholders by being customer-centric rather than profit-centric, especially in these difficult times and they have an obligation. to help policyholders who are facing a financial crisis at this critical time.