This article first appeared in The Edge Malaysia Weekly on January 25, 2021 - January 31, 2021

WITH the number of Covid-19 cases rising, a pressing issue that is being hotly debated is whether insurance companies should be made to bear the cost for infected policyholders who are treated at private hospitals.

Insurance associations say generally, pandemic-related risks — such as for Covid-19 — are not covered under any insurance and takaful plans worldwide. Hence, it is within their right not to bear the cost.

If so, does this mean that burden of the cost should fall entirely on the patient? What of patients who can’t even normally afford private healthcare treatment? Should private hospitals play their part and fix a more affordable rate?

There are growing calls from many, including private hospitals, to compel insurers to revise their policies to enable Covid-19 medical coverage.

Amid this intense debate, the industry associations were to meet with the Ministry of Health (MoH) on Jan 23, sources say.

“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,” an industry source tells 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. So, there are many permutations,” he adds.

The Life Insurance Association of Malaysia (LIAM), which The Edge reached out to for comment on a host of questions relating to Covid-19 coverage, said last Friday it would be making an official statement on the subject.  The General Insurance Association of Malaysia (PIAM) said it was not immediately able to comment.

Big insurance players that The Edge reached out to, including AIA Bhd and Prudential Assurance Malaysia Bhd, declined comment, requesting that we wait for a statement from the associations.

On Jan 17, LIAM, PIAM and the Malaysian Takaful Association (MTA) put out a joint statement to say that the industry is working with the MoH and Bank Negara Malaysia to “explore avenues where insurers/takaful operators can ease some of the expenses of patients whose conditions are required to be treated in private hospitals under the present circumstances”.

PIAM chairman Antony Lee, in an interview with BFM last Friday, said for now, insurance companies could only afford to offer limited Covid-19-related policies such as travel insurance, but not full medical coverage.

“If you are looking at a full-blown cover where we cover absolutely everything from A to Z … that is going to need time, clearly,” he told the radio station.

Industry sources say several insurers had on a goodwill basis waived the pandemic-related exclusion clause from their medical plans early last year, prior to Covid-19 being declared a pandemic, thus allowing for some form of coverage for patients. Most have now withdrawn that waiver.

AIA, in a Jan 21 internal circular to its agency force aimed at providing clarity on its Covid-19 coverage, said some of its “older block” of medical plans have the clause that excludes coverage for communicable diseases that require quarantine by law.  However, it said the newer generation of AIA medical plans do not have this exclusion clause.

“What this means to our customers of these plans is that they will be covered for hospitalisation under their medical plans if they are diagnosed with Covid-19 and require inpatient treatment which is medically necessary at hospitals,” it said in the circular sighted by The Edge. It added that this would be subject to a plan’s terms and conditions.

Prudential too issued an internal circular on Jan 21. “During the early stage of the pandemic, we had, on a goodwill basis, waived the exclusion clause … for our customers who are treated at designated government hospitals in Malaysia. This waiver shall continue, and Prudential reserves the right to withdraw it in the future,” it said.

“On treatment of Covid-19 in private and overseas hospitals, this will follow the respective plan’s terms and conditions. For plans with mentioned exclusion clause, treatment of Covid-19 in private and overseas hospitals will not be covered. For plans that do not carry this exclusion clause, treatment cost can be on reimbursement basis, subject to reasonable and customary charges,” it added.

The insurance industry says the exclusion clause exists because of the difficulty in pricing for coverage relating to an event like a pandemic that may occur once in a lifetime, which has an incalculable impact and cost.

Public hospitals can no longer cope given an alarming rise in new coronavirus cases. As such, the MoH, enabled by the Emergency Ordinance, has instructed private hospitals to take in Covid-19 patients.

In the past, private hospitals would just refer such patients to their public counterparts.

Association of Private Hospitals Malaysia president Datuk Dr Kuljit Singh last week urged the government to compel insurers to revise their policies and cover treatment cost.  

“Rejecting patients for us means coughing up fines up to RM5 million or jail time. While we are happy to help the government, some of us will take in patients at the risk of going belly-up. But the same is not expected of insurance companies. The government has to make similar demands  (on the insurers) so that we can treat them without burdening taxpayers,” he told The New Strait Times.  

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