Bank Negara Malaysia’s (BNM) recent move to implement co-payment requirements for medical and health insurance and Takaful (MHIT) products is expected to expand consumer options and enhance financial protection, according to the Fintech Association of Malaysia (FAOM).
BNM has issued a clarification regarding misleading social media posts by some registered agents urging customers to purchase medical reimbursement products without co-payment features before September 2024.
The regulator clarified that insurers/takaful operators (ITOs) are required to offer medical reimbursement products with co-payment features (i.e., deductible, co-insurance/co-takaful) as an option at the point of sale or renewal of existing MHIT policies/certificates effective 1 September 2024.
However, existing medical reimbursement products without co-payment features, including those with deductible below RM500, are still allowed to be offered by ITOs.
According to FAOM, co-payment insurance policies are expected to lower premiums, making them more affordable and accessible.
The association added that these co-payment insurance policies also intend to offer resilience against inflation and greater transparency in coverage.
Nevertheless, health policy think tank Galen Centre warns that this may cause policyholders to face high out-of-pocket medical expenses under co-payment policies.
The centre urged BNM to set co-payment limits to prevent policyholders from facing these excessively high charges.
Without these limits, there is a risk that policyholders might need to take bank loans or use their EPF savings to cover healthcare costs.
On the other hand, FAOM opines that BNM’s integration of these policies alongside existing offerings is meant to ensure that consumers have more choices to suit their needs.
FAOM instead stressed the importance of educating consumers on policy terms and financial implications to safeguard consumer interests.
Monitoring and feedback following the implementation on 1 September 2024 will reportedly ensure a smooth rollout and address consumer concerns.
FAOM also emphasized the role of digitalisation, dynamic pricing, data analytics, and ecosystem integration in optimising co-payment insurance offerings.
The fintech sector is poised to support of these initiatives, particularly with the upcoming Digital Insurance and Takaful Operator (DITO) framework and licensing.
FAOM said in a statement,
“We foresee significant opportunities for collaboration between insurtechs, insurance, and takaful operators (ITOs) facilitated by FAOM. This collaboration will advance consumer centric solutions and foster a more resilient and inclusive insurance landscape.
As Malaysia moves towards greater digital transformation in financial services, FAOM remains committed to advocating for responsible innovation and ensuring that co-payment insurance policies deliver tangible benefits to consumers across the nation.”
