Changing insurance landscape
CHANGES are taking place in the insurance sector, both good and bad.
Here’s some of the bad: Malaysian healthcare insurance premiums rates are expected to increase by 15% per year. This is way higher than the rates our salaries rise.
The higher premiums are partly attributed to lifestyle diseases. So too are increases in the cost of drugs and treatment. Nobody doubts the rising cost of drugs and medical treatment.
But is there transparency in hospital charges? Are fees such as laboratory investigations regulated?
When patients get admitted with a medical insurance card, some hospitals and doctors view it as a field day, doing all kinds of tests and treatments. After all, the payment comes from the insurance company.
In this respect, insurance companies are also to be blamed. Everybody knows this is happening, but nobody wants to do anything about it.
Insurance companies with their wealth of funds should innovate and offer products that lower the cost of premiums. This is not happening fast enough and some have taken the initiative to disrupt the industry.
New insurance companies using technology are seeking to disrupt the market and provide wider coverage to the underserved.
These range from selling cheap products to the student market (long underserved by insurance agents due to the small premiums) to providing time-based and userbased motor insurance, right down to providing quick DNA testing to offer more tailor-made products and coupling that with health advice.
Then, there is the growth of “captive” insurance, where companies create their own insurance unit to cater to the organisation’s needs. Lower premiums, tax advantages and getting to insure otherwise “uninsurable” risks are some of the key benefits.
According to Bank Negara, new technologies are set to have a positive impact on the insurance sector, noting in particular that “captives” are poised to use these innovations and move beyond large companies as many SMEs are assessing these models. Bank Negara also notes that the evolution of big data and insurtech has opened up significant new possibilities for segmenting and pooling of risk and capital, and tailoring solutions to specific needs and profiles. Hopefully with all this going on, the cost of insuring one’s health reduces and not the other way around.