Thursday, 21 March 2019

Time to cover early stage illnesses

KUALA LUMPUR: Etiqa Family Takaful Bhd believes it is high time for the insurance industry to start providing medical coverage to people with pre-existing illnesses which are at the early stage due to developing trends in modern day medical advancements that allow for more efficient disease detection.

The company, which is the second biggest family takaful provider (or life insurance provider in conventional insurance) in the country, said providing medical coverage for those with early stage diseases can increase the insurance penetration rate in the country and spur industry growth.

“We have to broaden protection to (cover)those in need, especially those who already have diabetes or other illnesses. I think this will extend coverage to all – medical, death and critical illnesses,” its chief executive officer Zafri Ab Halim tells StarBizWeek.

“We need to come up with products to cater to those who have been unfortunate and who already have illnesses.

“This is because of advancements in technology, illnesses can now be detected early these days.

“We should then think of giving cover for people who have illnesses at the early stages,” he adds.

Illnesses that are diagnosed and treated at an early stage gives an individual a much higher chance of survival and living a normal life.

The current practice of the insurance industry is to usually deny any medical insurance coverage to people who have diagnosed illnesses, the group of people who are most willing and needing to buy insurance coverage but who can’t get any coverage even with exclusion clauses.

This represents a huge overlooked growth potential area for insurers.

“Insurance should not only be solely focused on bottomlines, but we should be also socially responsible to do what the industry is supposed to do, that is to provide protection to the people,” Zafri says.

He notes that penetration numbers for the life insurance and family takaful industry is still low at 56% and the numbers have not changed much in the past four years.

Meanwhile, Zafri also proposes another way of increasing the insurance penetration rate among the populace to also cover the bottom 40% (B-40) of society by offering more affordable products.

“We have to target to grow our profits to a certain level and also think of products that can help the B-40’s of society.

“Programmes such as perlindungan tenang with Bank Negara or the Race for Cover (under the Malaysian Takaful Association) program can do this,” Zafri says.

Etiqa Family Takaful is doing well currently and is expecting double digit growths in its toplines through its key channels of Bancassurance, the agency force and through online platforms.

“We would like to grow by double digit this year and in the next few years.

“The growth has been very good through Bancassurance while the agency force is doing well also. We must also pay attention to the quality of the agency force,” he says.

For its financial year 2017 ended Dec 31 (FY17), Etiqa Family Takaful had RM1.35bil in gross written contributions (GWC) and a pretax profit of RM458.4mil, with a total asset size of RM14.8bil and equity level of RM1.8bil.

It had a credit rating of A- from Fitch Ratings and AAA from RAM Ratings.

Meanwhile, Zafri says that premiums for medical insurance are reflective of medical costs and these have been rising due partly to the effect of the weak ringgit which had not recovered much.

“Medical costs have been rising by double digits for the past few years.

“Even the consultancy fees are really expensive nowadays.

“Every angle of medical costs continue to increase. Medical equipment is normally very expensive and it is imported,” he said.

“For the hospital you will try to cover whatever costs you incur in the shortest period of time.

“That is why these kind of expenses will be charged to the patient. Some way or another, there should be some controls on this as well,” he added.

He also said that tighter regulatory environment seems to be inevitable these days but this has added to costs of doing business as well.

“Without doubt the tighter regulations could divert market players’ attention from business focus to operational focus and dampen the growth of the market.

“However, it seems inevitable because with advanced technology, comes sophisticated cybercrime and fraud,” he added.


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