What is driving MHI claims inflation?

 There are several factors driving the inflation of medical and health insurance (MHI) claims in Malaysia:

  1. Longer Lifespan and Advanced Medical Care: Malaysians are living longer and have access to better and more advanced medical care. While this is a positive development, it naturally contributes to higher medical costs.

  2. Price Differentiation: There are anecdotal accounts of healthcare providers who engage in price differentiation, charging higher if a patient is insured.

  3. “Buffet Syndrome”: Policyholders seek to maximise the value of premiums paid and tend to utilise medical services with little incentive to consider the associated costs. This behavior contributes to escalating costs that are ultimately translated back into higher premiums.

  4. Hospital Supplies and Services: Insurance claims data analysed over 2013 to 2018 show that hospital supplies and services form the largest component of claims costs and is one of the main factors driving the increase in hospital charges.

These factors combined lead to an increase in MHI claims, which in turn makes MHI policies less affordable for all policyholders and increases the prospects of some higher-risk groups being excluded from access to medical insurance. It’s a complex issue that requires careful management and regulation to ensure that healthcare remains accessible and affordable for all Malaysians.

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