Kuala Lumpur: A more in-depth study will be conducted to consider the feasibility of detailed reporting on the profit and loss of each medical insurance policy, said Deputy Finance Minister Lim Hui Ying.
She told parliament that insurance and takaful operators (ITO) are not required to list the profit and loss of each medical insurance policy in detail at present. However, she said each ITO is required to declare its profit and loss in its annual financial statements under Malaysian Financial Reporting Standard 17.
She was responding to a question by Teresa Kok Suh Kim (PH-Seputeh), who wanted to know whether the government would instruct insurance companies to provide detailed listings of the profits and losses of each medical insurance policy to ensure transparency in determining reasonable premium increases.
Lim said ITOs are required to ensure that any internal practices for governing premium increases in medical and health insurance takaful products (MHIT) must take into account the balance between policyholder affordability and the sustainability of the MHIT products.
“For example, ITOs must monitor the cost experience of MHIT claims objectively, and may only adjust premiums when the actual claims costs consistently decline and exceed the threshold value previously set in the ITO’s internal practices. ITOs are also prohibited from resetting premiums solely to increase their profits,” she said.
According to her, Bank Negara Malaysia has enhanced the business practice standards for MHIT, including efforts to raise consumer awareness through improvements in the product disclosure sheet (PDS), making it simpler and easier to understand.
“These improvements aim to encourage policyholders to better understand the terms and conditions of MHIT products and make more informed decisions. The PDS will also state the claims ratio at the industry level to increase awareness among consumers that a significant portion of the premium is allocated to pay for claims,” she said.
