KUCHING: Malaysia’s race to offer ever-higher medical insurance coverage may have created expectations that bigger claims limits mean better protection, with premiums now catching up.
Financial content creator and entrepreneur Peter Yong said competition among insurers to offer increasingly larger annual coverage limits had changed how consumers, hospitals and the wider market viewed medical insurance.
Speaking during a recent podcast with Li Xin Lee, content producer at FinLit Media Tech Group, Yong said annual limits of RM100,000 were once considered substantial when he first entered the insurance industry.
“RM300,000 was already a super high-level plan,” he said.
Today, however, annual coverage of RM1 million, RM3 million or even RM5 million has become common in the market.
Yong said the shift began when insurers started using higher coverage limits as a competitive advantage to attract customers.
“One company launched a medical card with RM1 million in coverage every year,” he said, adding that the market’s typical maximum annual limit at the time was around RM300,000.
The move, he said, placed pressure on competitors to follow suit or risk losing customers.
“Everyone had to follow. If they did not, they would start losing customers,” he said.
Yong argued that higher limits could also influence expectations throughout the healthcare system, as the availability of larger insurance coverage made consumers and providers less concerned about the eventual size of a claim.
“When you allow such a high claim limit, the thinking becomes, ‘I can claim up to RM5 million’,” he said.
He said this could contribute to a market culture where consumers viewed a higher limit as inherently better, even though the amount of coverage was only one aspect of a sustainable medical plan.
The issue has become increasingly relevant as policymakers prepare a new standardised medical and health insurance/takaful option under the RESET strategy.
Bank Negara Malaysia’s proposed MediAsas base plan will have an annual limit of RM100,000, rising to RM150,000 for those aged above 60, while a standard-plus option will provide up to RM300,000 in annual coverage.
The regulator said the limits were designed to cover 99 per cent of treatment costs for common medical conditions based on recent claims trends.
Yong said lowering expectations would nevertheless be difficult after consumers had become accustomed to multi-million-ringgit annual limits.
“Now you go and reverse it, everyone is going to say the policy gives them such low coverage,” he said.
He added that the challenge was not simply about setting lower limits, but changing an industry model in which consumers had been encouraged to equate bigger coverage with better value.
For Yong, the question is whether Malaysians can move away from the assumption that the highest possible coverage is always the best option.
“If the system keeps moving in this direction, medical insurance will become harder to afford for many people,” he said.
