The benefits of the free National Health Protection Scheme, mySalam, may not be sufficient to meet the takaful needs of the bottom 40 percent household income (B40) group and make significant penetration in this segment, said a research consultant.
Dr Schanz, Alms & Company partner Henner Alms said although the demand for the government's insurance initiative was substantial, the programme had limitations.
"It covers 36 critical illnesses and provides a reward in case members acquire any of these diseases. However, the challenges the B40 segment are facing could be far wider. The question is really how do you get beyond the current solutions that are provided," he said.
He told reporters this at the launch of Malaysian Reinsurance Bhd’s inaugural issue of Thought Leadership publication, “Malaysian Insurance Highlights (MIH) 2019” in Kuala Lumpur today.
Alms said there had been very different approaches taken across emerging markets to gain access to more people.
"I think it is agreed that the under-penetration in low-income segments is a major challenge for every society because these people are those who are more exposed to disasters and have the least protection.
"Therefore, it is in the interest of every policymaker and insurer to find solutions to address this kind of challenge. However, it is not easy and often enough solutions that have been taken across different markets are frequently a combination of the private sector (insurers) and the government on the other side," added Alms.
On broadening the 36 critical illnesses scope, he said it was not necessary because the B40 segment was facing a number of different challenges.
"If you take, for instance, China and India, the agricultural insurance in combination with the government is a very good solution to provide income safety to that segment, but that is a completely different approach that will also provide great benefits," he said.
Meanwhile, Zainudin Ishak, chairman of MNRB Holdings Bhd, the parent company of Malaysian Re, said the idea was also to come up with a scheme that is commercially driven, supported by sufficient pricing mechanism with the right benefits.
"I think the regulators are trying to encourage industry players today to ensure that we're able to give the most efficient distribution channel - in terms of digitising insurance - so you're able to remove some of these costs and these costs can be translated directly to savings in (insurance) premium," he said.
Zainudin said those are some of the challenges besetting the insurance industry today and all stakeholders needed to find a solution.
MIH 2019, which includes input from over 30 senior insurance executives and experts operating in the market, focuses on five major trends, namely de-tariff, market consolidation, B40 strategies, takaful prospects and InsurTech.
The research publication is available on Malaysian Re's website.
- Bernama
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