KUALA LUMPUR — Insurance and takaful operators (ITOs) have proposed that group insurance schemes be exempted from the 8% sales and service tax to protect more workers.
The Life Insurance Association of Malaysia (LIAM), the Malaysian Takaful Association (MTA), and the Persatuan Insurans Am Malaysia (PIAM) made this and other proposals to the Public Accounts Committee (PAC) which is currently holding an inquiry into rising medical insurance premiums and private hospital charges.
The associations proposed that the sales and service tax exemption be given to group insurance to encourage more employers to provide insurance and takaful protection for employees.
“Currently, approximately four million employees, including those from the B40 group, are covered through workplace schemes,” it saidin a statement reported by Bernama.
Its other proposals included implementation of diagnostic-related grouping pricing to improve transparency in healthcare service charges and billing.
It suggested greater transparency by publishing the average costs of common procedures and treatments across private hospitals and annual medical cost inflation rates to help consumers become more financially aware.
“The establishment of an industry-wide claims database will improve claims analysis and help mitigate abuse.
“Aligning cost structures between healthcare providers, insurers, takaful operators (ITOs), and third-party administrators is essential in managing healthcare expenses effectively,” the associations said.
They also reiterated the co-payment approach as a key long-term solution to help policyholders and certificate holders manage costs.
“Co-payment encourages shared responsibility in healthcare expenses. Co-payment, especially co-insurance, can encourage more responsible consumption of health services.”
The proposals also called for regulating pharmaceutical costs by collaborating with the Health Ministry to promote the use of generic drugs and regulate medication pricing.
“Reports indicate that pharmaceuticals account for a substantial portion of private hospital revenue, indicating the need for cost controls.
“We urge private hospitals to set up cost containment units and freeze increases during periods when insurers and takaful operators are required to cap premium hikes. This measure ensures cost containment efforts are equally distributed across the healthcare ecosystem,” it said.
For the long-term, a sustainable insurance and takaful product should be developed through collaboration with Bank Negara, the groups added, while ITOs should still be allowed to officer top-up schemes for policyholders seeking additional coverage.
They also suggested appointing an independent consultant to conduct a detailed study to analyse and recommend actions for stakeholders to reduce claims inflation.
“This comprehensive study would provide data-driven insights and recommend effective actions to control rising claims costs.” – March 7, 2025