Will detailed profit, loss reporting for medical insurance be mandated?

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Detailed Profit and Loss Reporting for Medical Insurance Policies is Under Consideration

At present, insurance and takaful operators (ITO) are not mandated to provide detailed profit and loss reporting for each individual medical insurance policy. However, a more in-depth study is being conducted to assess the feasibility of implementing such detailed reporting requirements in the future. This consideration arises within the broader context of enhanced business practice standards for medical and health insurance takaful products (MHIT), aimed at improving transparency and consumer awareness.
Current Reporting Requirements for Operators

While detailed per-policy profit and loss statements are not currently required, all insurance and takaful operators must declare their overall profit and loss in their annual financial statements. This reporting adheres to the Malaysian Financial Reporting Standard 17, ensuring a degree of financial transparency at the aggregate level for each operator. The focus is on the overall financial health of the operator rather than the profitability of individual product lines.
Guidelines for Premium Adjustments

Insurance and takaful operators are subject to specific guidelines when considering premium adjustments for medical and health insurance takaful products. Any internal practices governing premium increases must strike a balance between policyholder affordability and the long-term sustainability of these products. Operators are expected to objectively monitor the cost experience of MHIT claims, and premium adjustments are permissible only when actual claims costs consistently exceed a pre-determined threshold value outlined in the operator's internal practices. Crucially, operators are prohibited from resetting premiums with the sole intention of increasing their profits.
Enhancements to Consumer Awareness

Bank Negara Malaysia has implemented enhanced business practice standards for MHIT, which include initiatives to boost consumer awareness. A key component of this effort involves improvements to the product disclosure sheet (PDS). These revisions aim to make the PDS simpler and more easily understandable for policyholders, thereby enabling them to make more informed decisions regarding their MHIT products. The updated PDS will also feature the claims ratio at the industry level, highlighting to consumers that a substantial portion of their premiums is allocated towards covering claims.

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Will detailed profit, loss reporting for medical insurance be mandated?

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