- Malaysians have complained of insurance companies are drastically reducing the duration of medical coverage under their policies
- For example, two policyholders who bought investment-linked medical insurance policies with riders to cover their medical bills until age 100, were recently told the insurance would only cover their bills until ages 64 and 59 — a reduction by 36 and 41 years, respectively
- MP Sim Tze Tzin said this is because of insurers’ over-optimistic projection of investment returns, and asked regulator Bank Negara Malaysia to take action, especially to protect retirees
KUALA LUMPUR, Sept 8 — Insurance industry regulator Bank Negara Malaysia (BNM) should step in with solutions to help Malaysians who are either facing sudden increases in medical insurance premiums or drastic reductions in the duration of healthcare coverage, Bayan Baru MP Sim Tze Tzin said today.
Sim noted news reports yesterday of the T20 group or top-income Malaysians shifting to public hospitals due to hikes in medical insurance premiums, treatment costs exceeding their insurance coverage limit, as well as rising medical costs in private hospitals.
He said such news reports match the recent complaints that he had received from the public about their investment-linked medical insurance policies.
“I hope Bank Negara Malaysia can pay serious attention to this matter, and act accordingly. A transparent mechanism should be established, so that the public does not experience shock when their insurance premium increases drastically, or their insurance term is reduced drastically,” he said in a press statement today.
He cited the Financial Services Act 2013’s Section 155(b), where Bank Negara may issue directions if it is of the opinion that any institution is carrying on business in a way that is “detrimental to the interests of depositors, policy owners, participants, users, creditors” or the general public.
Sim cited three complaints from consumers who had purchased their medical insurance policies in 2018, but were recently informed that their insurers would reduce the duration of coverage.
Two complainants, aged 47 and 45, each bought a RM2.1 million investment-linked policy that was supposed to provide coverage until age 100. They were instead told to pay higher premiums while their coverage terms were cut to ages 68 and 59, respectively.
In the 47-year-old’s case, the insurer explained that the earlier estimates were only “sales illustrations” and the most optimistic projection during the time of insurance purchase.
The 45-year-old, meanwhile, was told his insurance term will be slashed to age 59. The insurance firm had only reduced the premium by RM2.40 after the consumer tried to reduce the healthcare coverage from RM2.1 million to RM1 million.
A third complainant, aged 59, was told his new premium of RM3,600 would only cover two more years. To extend coverage, the insurer required an additional RM8,580 — a 138 per cent increase — for protection until age 81, or RM10,800 — a 200 per cent increase — for coverage until age 90.
Sim said the issue stemmed from insurers being “too optimistic” when selling healthcare policies. In reality, the returns were far lower, leaving insufficient funds to cover medical bills and forcing insurers to drastically shorten coverage terms, he added.
“This means that when they retire in their 60s and really need medical coverage, they will be ‘ditinggalkan’ (abandoned) by insurance companies,” he said.
While BNM had in July 2019 issued a circular to regulate such investment-linked insurance products, Sim said those who bought such policies before 2019 are now facing problems: “Therefore, I urge BNM to find solutions for cases before year 2019.”
He added that if the issue is not addressed, more retirees and members of the T20 income group would continue to shift from private to public hospitals, further burdening the public healthcare system.
