KUALA LUMPUR (Jan 30): Medical and health insurance policies issued by general insurance companies do not provide coverage for pandemics such as Covid-19, the General Insurance Association of Malaysia (PIAM) said today.

“The reason for this is that pandemics have been assumed as a rare event and thus, the absence of wide coverage under most policies. Pandemics are generally a risk with high exposure. As insurance premiums will commensurate with the risk exposure, insurance premiums will naturally be higher if a pandemic is covered,” it said.

“Higher premium may affect consumers’ affordability and accessibility to essential medical health insurance protection,” it added.

PIAM issued the statement to The Edge today in response to a report in its Jan 25 issue titled ‘Growing pressure on insurers to cover Covid-19 treatment at private hospitals’. The article highlighted the increasing calls from many, including private hospitals, to compel insurers to revise their policies to enable Covid-19 medical coverage, especially given that the number of cases is rising.

In its statement, PIAM said it was not aware if its members have plans of extending Covid-19 coverage to their existing policyholders.

“At least, currently, there is no indication that they are planning to do so. Decisions like this require the insurers to review their business strategies, portfolio exposure and their capacity to underwrite such risks. It would be premature for us to comment on this at the moment,” it said.

The association noted that while the probability and frequency of a pandemic are low, its severity is high. “If it occurs, a pandemic will affect a large section of the population thus affecting the risk-pooling concept of an insurance company.

“If pandemic is required to be covered, more data will be needed to readily and accurately predict its cost and impact. Primarily, pandemics are not priced into medical insurance premium to make them more affordable to consumers,” it said.

The industry is nevertheless in “active discussions” with the Ministry of Health (MoH) and Bank Negara Malaysia on how it can support the government during this Covid-19 emergency.

“We wish to advise that the current situation is still fluid with many details yet to be resolved. However, we are confident that we can finalise the details very soon.

“Pandemic treatment costs such as Covid-19 are generally not covered under the Medical and Health insurance (MHI) policy, and as such, the industry is considering other ways it can support and help Malaysians to overcome this pandemic,” it said.

Given that discussions are still ongoing, PIAM urged the public to wait for an announcement in the near future which would be made jointly with other trade associations, namely the Life Insurance Association of Malaysia (LIAM) and the Malaysian Takaful Association (MTA).

For now, however, it urged members of the public to “shop around and seek out the best products” that meet their needs. “This is important as the scope of cover, terms and conditions may differ between one insurer and another. The premium charged will correspond with the cover selected,” it said.

While it remains to be seen what will come out of the insurer’s discussions with the MoH, an industry source told The Edge, as reported in the earlier story, that there are several permutations up for consideration.

“It’s quite a complicated issue. There is an association stance, and then within it, some players also have their own proposals, so let’s see what the final outcome is,” the source told The Edge.

“Generally, insurers feel it’s not fair for them to bear the cost. There’s this debate on whether it should be shared and if so, how. There’s also discussion about creating a pool of funds that everyone contributes to, with the fund then passed on to either the government or private hospitals that can draw down from it,” he said.