.JPG "BNM said the impact of the temporary relief measures on ITOs’ profitability has been limited as the cumulative amount of premiums deferred and on holiday remained minimal at 7.7 per cent of premiums in force. — Picture by Ahmad Zamzahuri")
Subscribe to our Telegram channel for the latest updates on news you need to know.
KUALA LUMPUR, March 31 ― The insurance and takaful sector's total net policy benefit payouts could increase in 2021 due to additional costs associated with Covid-19-related procedures and treatments that are incidental to covered conditions, but the impact is expected to remain manageable, Bank Negara Malaysia (BNM) said.
“While death due to the pandemic is claimable under all life insurance policies and family takaful certificates, the low mortality rate observed among Covid-19 patients in Malaysia at 0.4 per cent against the global rate of 2.2 per cent would likely limit the impact from any additional death claims,” it said in the Financial Stability Review for Second Half 2020 report released today.
It also noted that medical and health insurance policies/takaful certificates (MHIT) in Malaysia generally carry a pandemic exclusion clause in line with practices globally.
“These exclusions reflect the complexity of pricing for such events due to the incalculable impact and costs, an absence of viable risk diversification instruments for insurers and takaful operators (ITOs), and to avoid significant premium hikes following a pandemic event,” the central bank said.
In view of the resurgence in Covid-19 cases and the reintroduction of movement control order in most states in early 2021, ITOs have extended the option for affected consumers to defer premiums due under life insurance policies and family takaful certificates for three months without affecting the coverage.
The option is now available for applications received until June 30, 2021.
BNM said the impact of the temporary relief measures on ITOs’ profitability has been limited as the cumulative amount of premiums deferred and on holiday remained minimal at 7.7 per cent of premiums in force.
The central bank said some ITOs made adjustments to their repricing plans in 2020 to reduce the financial burden on policyholders and preserve their MHIT coverage, including deferring re-pricing plans to 2021, and permitting extended deferral of premiums.
ITOs are expected to be able to comfortably support the financial impact of these adjustments without affecting their overall resilience in the short term, it said.
“Nevertheless, deferment of re-pricing over an extended period will not be financially sustainable for both the MHIT providers and policyholders as over the longer term, medical claims would reflect the underlying trends in medical inflation,” added BNM.
The central bank said medical claims are expected to increase this year compared to 2020 as a result of the resumption of treatments and procedures that were earlier delayed by policyholders due to Covid-19 concerns.
“Thus, further delays in re-pricing plans can lead to much steeper premium increases or reduced capacity of the industry to provide coverage in the future,” said BNM. ― Bernama
Source: Malay Mail
No comments:
Post a Comment