Time for Bank Negara to protect the life and health of 31 million Malaysians instead of insurers’ profit and wealth — Lim Guan Eng

Time for Bank Negara to protect the life and health of 31 million Malaysians instead of insurers’ profit and wealth — Lim Guan Eng

The time has come for Bank Negara to demonstrate its social empathy, public responsibility and ethical compassion. In making its decision by the end of this month, Bank Negara should choose to protect the life and health of 31 million Malaysians instead of protecting the profits and wealth of 16 life insurance and takaful companies, by categorically rejecting the excessive 40-70 per cent hike in medical insurance premiums next year.

Bank Negara had disclosed that life insurance companies have to hike up medical insurance premiums next year to counteract the gross increase in medical costs of 15 per cent in Malaysia for 2025 as compared to the corresponding 10 per cent global medical cost increase and 11.1 per cent increase for the Asia Pacific region. This failure at cost containment by the private health and life insurance industry in Malaysia raises 3 questions of public accountability for regulators in the Health Ministry and Bank Negara.

Three questions of public accountability

One, why should medical insurance premiums be hiked up by 40-70 per cent next year, which is much higher than the 15 per cent increase in gross medical costs? Two, what are the underlying reasons that have allowed gross medical costs to run out of control and increase at a higher rate as compared to our regional neighbours and globally? Three, why should this failure of cost containment of medical costs be borne solely by policyholders and the public?

There are valid concerns at the regulatory failure of Bank Negara in preventing abuses in imposing medical costs by both the private hospitals and the life insurance industry. A cost comparison study from 2021-2023 highlights that a dengue patient using a guarantee letter(GL) costs RM 4,978, which is four times higher than the cost of RM 1,288 for the same dengue patient that pays first and claims later. Similarly Bank Negara concedes that a pneumonia patient using a GL will pay RM 6,859, which is 3 times higher than the RM 2,654 paid first by the patient and claiming later. Why are the abuses allowed to recur by the authorities?

Do our salaries go up by 40-70 per cent in one year?

Any repricing adjustments of medical insurance premiums should be implemented gradually in a sustainable and reasonable quantum, not in an excessive and massive 40-70 per cent hike as is proposed for next year. There is no evident urgency for life insurance companies to have such a massive and excessive 40-70 per cent hike in medical insurance premiums when they are recording healthy profit growth.

According to Bank Negara, overall profitability of life insurance and family takaful funds was higher in the first half of 2024 at RM8.4 billion, more than double their profitability in the second half of 2023 at RM3.2 billion. Have life insurance companies not earned enough? Why should the life insurance companies be allowed to earn more profits from income off the backs of hard-working and hard-pressed Malaysians?

When workers’ salaries never hike up by 40-70 per cent in one year, there is no clear and defining moral justification for life insurance companies to hike up medical insurance premiums by 40-70 per cent next year.

* Lim Guan Eng is Bagan MP and national DAP chairman.

** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.

** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.