Rising medical inflation is an unfortunate reality for many countries right now. This year, the global medical insurance inflation hit  9.2%, the highest it has been since 2015, with Malaysia and Singapore (15% and 12% respectively), seeing some of the highest rates in the world. With this in mind, we share how you can help limit the impact of rising medical insurance costs in your business while also providing employees with an appealing benefits program.

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A health check on medical insurance costs

In Malaysia, a key driver of the increase in private medical costs and claims is non – communicable diseases (NCDs). NCDs such as diabetes, cardiovascular disease and cancer are reported to have exceeded RM 9.65 billion in direct health care costs each year.

Coupled with the advancement of many insurance products that are available in the market, features such as high annual limits and ‘cashless’ facilities can lead to ‘buffet syndrome’ which ultimately increases the average claims per insured, resulting in more expensive medical insurance premiums .  Claims have also been increasing at a faster rate than premiums, jumping from 80.2% to 88.6% of each premium dollar between 2017 and 2019.

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How can businesses reduce costs & still offer appealing benefits?

With the rate of claims on the rise, it is likely that premiums for life and medical insurance will also be affected. Here are some of the approaches that companies can use to help limit growing medical claim costs and premiums:

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1. Switch to flexible benefits

Instead of the traditional one – size – fits – all benefits offering, flexible benefits allow you to deliver more value. With the convenience of selecting their desired benefits, employers may see cost reductions from the following scenarios:

• Employees can choose lower coverage to access non-insured benefits, reducing the insurance program’s claim exposure and resulting in a healthier loss ratio*.
• By giving employees the opportunity to select their preferred benefits, employers can understand the preferences within their workforce and limit wastage by designing their flexible benefits accordingly.

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2. Prevention is better than cure

A flexible spending account (FSA) can be a compelling offering for employees through flexible benefits. Various lifestyle benefits can be added to the FSA list, allowing employees to select from options such as medical check–ups, gym memberships, as well as purchasing sports equipment, home gym equipment, and supplements. This allows employees to take a preventative approach to their health, instead of relying on an insurance program that acts as a remedial tool.

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3. Flexible working arrangements

Based on a report by TalentCorp Malaysia and the United Nations Development Programme (UNDP) Malaysia, flexible working arrangements can improve both employees’ engagement and productivity when implemented well. Noteworthy perks include less time spent commuting, fewer interruptions, cost savings, and better work-life balance.  Ultimately, this can also reduce employees’ reliance on insurance.

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With you all the way

To find out more about how you can help limit the impact of rising medical insurance costs in your business and simultaneously provide your employees with a compelling benefits program, please feel free to reach out at any time.

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Andrew Goh

Employee Benefits – Manager

andrewgoh@mpinsb.com.my

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