Recently BNM has announced that with effect from Sept 1, 2024, insurers and takaful operators (ITOs) must offer consumers an option to purchase medical and health insurance and takaful (MHIT) with a co-payment feature. The existing, current policies can be as per usual but in the future all new MHIT products must have co-payment features,

So, what is a co-payment feature?

Co-payments – which are out-of-pocket payments paid by the insured patient at the time of a claim – were set by the central bank at a minimum 5% of claimable expenses, while ITOs are allowed to determine the cap.

The co-payments will not apply to emergencies, outpatient treatment for critical illnesses, or visits to public hospitals and clinics.

This move is deemed to address medical cost inflation across the healthcare value chain, especially when in 2023, Malaysia recorded medical cost inflation of 12.6%, which is significantly higher than the global average of 5.6%.

One thing is that the co-payment feature could discourage medical insurance uptake, as people might not have the means to afford the additional upfront out-of-pocket costs. On the other hand, some consumers may see lower premiums in the short term hence being able to afford cheaper or lower-cost medical insurance, leading to increased sign-ups. So, how many consumers would actually opt to switch remains to be seen.

Insurance players that are big in this space, such as $ALLIANZ / 1163 (ALLIANZ MALAYSIA BERHAD) $TAKAFUL / 6139 (SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHAD) $MANULFE / 1058 (MANULIFE HOLDINGS BERHAD) would be affected... the question is whether it'll be a boon or a bane.

Source: https://cutt.ly/9egE7VT8