BNM should protect Malaysians and not profits of insurance companies

THE time has come for Bank Negara Malaysia (BNM) to demonstrate its social empathy, public responsibility and ethical compassion, said Lim Guan Eng.

The former finance minister said BNM 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.

"BNM must categorically reject the excessive 40-70% hike in medical insurance premiums next year," he said.

BNM 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% in Malaysia for 2025 as compared to the corresponding 10% global medical cost increase and 11.1% increase for the Asia Pacific region. 

"This failure at cost containment by the private health and life insurance industry in Malaysia raises questions of public accountability for regulators in the Health Ministry and Bank Negara.

"Why should medical insurance premiums be hiked up by 40-70% next year, which is much higher than the 15% 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?," asked the DAP chairman.

He said there are valid concerns about the regulatory failure of BNM 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 who pays first and claims later. 

Similarly, BNM concedes that a pneumonia patient using a GL will pay RM 6,859, which is three times higher than the RM 2,654 paid first by the patient and claimed later. 

"Why are the abuses allowed to recur by the authorities?," asked Lim.

Do Our Salaries Go Up By 40-70% In One Year?

The Bagan MP said 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% 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% hike in medical insurance premiums when they are recording healthy profit growth.

"According to BNM Negara, the 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?".

He said since workers' salaries do not increase by 40-70% in one year, there is no clear and defining moral justification for life insurance companies to hike up medical insurance premiums by 40-70%  next year. - December 11, 2024