By DayakDaily Team
KUCHING, Dec 13: The practice of misleading clients into purchasing insurance policies they cannot sustain in the long run, especially due to potential premium increases, must end.
Michael Kong, special assistant to Democratic Action Party (DAP) Sarawak chairman Chong Chieng Jen, urged the government to scrutinise the practices of insurance providers and introduce measures to protect consumers effectively.
“Misleading clients into buying policies they cannot sustain undermines the very essence of insurance, which is to provide security and peace of mind,” he said in a statement today.
Kong highlighted that many insurance proposals are deliberately priced at attractively low rates to entice prospective clients, creating the false impression that such policies are affordable.
“However, what many insurance providers and agents fail to inform these prospective clients is that the price of these policies will inevitably increase in the future, leading to a corresponding rise in monthly insurance premiums.
“This is particularly concerning because, in many cases, these premiums increase when clients have reached retirement or are nearing retirement age. With no source of income, how are these individuals expected to pay for the sudden increase in premiums?” he questioned.
While some insurance providers argue that the ‘cash value’ of policies can offset premium hikes, Kong pointed out that this solution is often short-lived.
“More often than not, it will only be sufficient for a couple of years before the client will have to cover the premium increase with their own money,” he said.
Kong emphasised that long-established insurance companies should be capable of forecasting future medical expenses and related costs when proposing plans.
“Therefore, it is incumbent upon them to do so. Passing off an insurance policy as ‘affordable’ without considering the future inability of such clients to pay, especially when they have retired, is unethical and gives false hope and impression to the customers. This practice must stop,” he asserted.
Recent reports indicated that medical insurance premiums are expected to rise by 40 to 70 percent next year, driven by rising costs in private hospital care. This has already led some policyholders to terminate their policies due to unaffordable monthly fees.
Yesterday, Prime Minister Datuk Seri Anwar Ibrahim said that insurance players, Bank Negara Malaysia (BNM) and the Ministry of Health (MOH) will establish controls to ensure that medical insurance premiums will not rise too steeply to the extent of burdening the people and leading to increase in inflation.
He said that BNM, together with the Ministry of Finance (MOF) and MOH, is currently looking into it and will issue strict guidelines to ensure that medical and health insurance and takaful (MHIT) providers, as well as insurers and takaful operators (ITO), take several factors into account. — DayakDaily