Greater consumer education is needed to ensure a sustainable increase in medical insurance premiums and the insurance penetration rate in the country, according to Manulife Holdings (Manulife).
This is crucial as only 40% of Malaysians are insured, offering significant growth potential for insurance companies to tap into.
“Despite being a saturated market for insurance, Malaysia has only a 40% insurance penetration rate and a significant underinsured population. Coupled with an ageing demographic, this presents a substantial growth opportunity for the Malaysian insurance industry,” said Manulife’s group CEO Vibha Coburn.
“People often don’t fully understand the importance of insurance until they need it. You insure your car, your house and even some jewellery, but often overlook the most valuable asset — your life. It’s about protecting your loved ones and ensuring their financial security.”
The rising cost of healthcare has been a challenge for insurers like Manulife to strike a balance between customers’ needs and managing its bottom line.
Ms Coburn describes the recent increases in premiums for medical insurance as unprecedented due to a spike in medical inflation combined with higher insurance claims.
“Medical inflation has been soaring, exceeding 16% annually over the last three years or so, coming up to about 56%. Utilisation of insurance is also going up post-pandemic, particularly for elective surgeries, potentially driven by pent-up demand,” she said.
“There is a reason why the repricing has to happen. Normally, insurance companies reprice every three years. Due to high medical inflation like this, the increase is very large. This necessitates premium adjustments to ensure the sustainability of insurance coverage, because insurance companies need to be financially stable and sound. Otherwise, they won’t be able to keep their promise to insurance holders.”
While acknowledging the need for increases in premiums, Manulife said it is committed to meeting customer needs by offering options to ensure they remain covered, reported The Edge.