The General Insurance Association of Malaysia (PIAM) said over the weekend that medical and health insurance policies issued by general insurers do not provide coverage for pandemics such as COVID-19.
“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 in a statement to The Edge.

PIAM issued the statement in response to a report by the newspaper in its 25 January 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 whether 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.

More data required

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.

This was the same message which was conveyed in a joint statement on 17 January by PIAM, the Life Insurance Association of Malaysia (LIAM), and Malaysian Takaful Association (MTA) that said that generally, pandemic-related risks are not covered under any insurance and takaful plans worldwide.

The statement also said that the insurance and takaful industry is working with the Health Ministry and Bank Negara Malaysia to explore avenues where it can ease some of the expenses of COVID-19 patients whose circumstances require them to be treated in private hospitals.

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