By DALJIT DHESI
daljit@thestar.com.my
Saturday July 24, 2010
HIGH incidence of fradulent claims and the escalating medical costs are some of the pressing concerns facing insurers offering medical and health insurance (MHI). While healthcare is vital, industry players feel insurers need to be cautious in their MHI coverage to avoid losses from fraud.
Life Insurance Association of Malaysia president Md Adnan Md Zain says even if healthcare cost increases due to inflation can be mitigated, abuse and fraud are the main challenges facing insurers.
There is a need for them to be prudent and to manage their loss ratio effectively by being selective in providing coverage, he notes.
Md Adnan says there is a tendency for doctors to charge higher for patients who have MHI. “Currently, most – if not all – insurers provide value-added services like issuing letters of guarantee to hospitals for eligible policyholders. This facility allows the insurers to settle the bill on behalf of the policyholders in accordance to the benefit level, if eligible.
“This facility can be a subject of abuse and poses a great challenge to insurers. As a result, companies rather opt out and revert to the conventional method whereby the policyholder pays for the treatment first and then submits to the insurers for reimbursement, subject to the terms and conditions of the plan purchased,” he tells StarBizWeek.
Concurring with Md Adnan on the need to be prudent, MAA Assurance assistant vice president of healthcare Chong Chee Yoong says health insurance, whether in Malaysia or in the US, is never a profitable line of business due to escalating costs of treatment and technical innovation, unless insurers underwrite the portfolio and manage claims prudently.
Malaysian Medical Association president Dr David KL Quek, on the other hand, feels certain serious illnesses such as childhood leukaemia and congenital heart diseases, as well as pre-existing diseases such as diabetes and hypertension, should be covered by insurance like in other countries to ensure the unfortunate get help to pay for their treatment and care.
Many are now left exposed to possible financial ruin because they cannot afford the actual costs of such treatment, he adds. He says Bank Negara should advise or mandate that health insurers provide cover for such ailments.
Quek also points out that many insurers are not keen on providing insurance coverage to senior citizens, especially those above 70.
Some health plans for the elderly, he says, are prohibitively expensive, although most healthcare costs occur during old age. This leaves many of the elderly uninsured and unable to get prompt treatment, if at all.
Md Adnan says healthcare plans are constantly evolving and some insurers have developed products by providing more cost-effective options to consumers.
One recent innovation is the introduction of no-claims bonus for MHI plans, in which consumers with good claims records will receive cash payments. For example, some insurers have increased or removed lifetime limits on claims, while others are considering including traditional medicine to the benefits covered, he adds.
“Certain lines of critical illness products now allow consumers to make multiple claims, although for different illnesses each time, in response to an environment where better medical technology increases the likelihood of recovery from critical illnesses. With increased life expectancy, there is also a push towards longer-term MHI and medical and health takaful (MHT), with some products now covering policyholders up to age 100,” he explains.
The importance of healthcare can be seen from Bank Negara’s Financial Stability and Payment Systems 2009 report, which showed that total MHI and MHT gross direct contributions recorded a 22.6% increase from RM900mil in 2008 to RM1.1bil in 2009. This is in tandem with the rising private expenditure in healthcare. which reached RM18.9bil in 2008.
Prudential Assurance Malaysia Bhd CEO Charlie E. Oropeza says medical insurance will continue to contribute to a significant portion of its business.
The demand for the company’s health-related products, he adds, has been very consistent throughout the years, with about 90% of its investment-linked insurance policies attached with at least one health/medical rider.
Oropeza says one way to address and manage high claims ratio effectively is by working closely with healthcare providers and offering on-going education for consumers on medical claims, although this takes time.
To help mitigate high medical claims, he adds, insurers can also play an active role in promoting healthy living.
For example, the company’s PRUhealth product encourages healthy living while providing comprehensive medical coverage, he notes.
The product rewards policyholders with an annual No Claims Bonus, which is earned when the customer does not make any medical claims on his policy in the year.
CIMB Aviva Assurance Bhd CEO Kevin Jones says the consumer still lacks understanding when coming to MHI. “In many cases, consumers assume that by contributing a mere RM50/RM100 a month, their medical and health plan will cater to all expenses on all medical treatment/ailments.
“The recent Product Transparency and Disclosure Guidelines issued by Bank Negara in April this year is a good move as it ensures that a consumer is given clear information about the product at the point of sale to enable him to determine if the product adequately meets his needs.”
Chong of MAA Assurance says there is still room for improvement when it comes to charges by hospitals and specialists. The implementation of the Private Healthcare Facilities and Services Act 2006, he says, has in a way improved the negotiation on specialists’ charges but not on the hospital supplies and services, which form a major component of the overall hospital bill.
From The Star Online published on Saturday July 24, 2010
