Private Sector Health Actuarial Practice in Malaysia

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Derrick Shelton
10 years ago
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1 Private Sector Health Actuarial Practice in Malaysia Please provide an estimate of the number and percentage of full members of your association who practice full-time or part-time as health actuaries. Health practice is defined as actuarial work in any product listed in the question below. There are no full time or part time health actuaries in Malaysia. Most qualified actuaries are life insurance actuaries and have very limited knowledge about health pricing and claims analysis. Most of the work in health insurance are performed by underwriters and claims specialists. Appointed actuaries have direct responsibilities for health insurance reserving and IBNR. Estimate the sources of health actuarial employment (insurance companies, reinsurance companies, insurance consultants, employee benefit consultants, other). Health reinsurers do provide some actuarial support in product pricing and portfolio analysis. For example, Munich Re get their actuarial support from their home office. Gerling Re has an actuary heading the Heath Reinsurance Operations in Singapore. There are very few insurance consultants. All of them are not actuaries, but have experience and qualifications in health insurance or hospital management. There should be increasing demand for health actuaries in insurance companies but most insurance companies health portfolio constitute a small percentage of their book of business. Thus, there is little emphasis to manage the health portfolio better.

2 Identify private health insurance products offered in your country with information on their size and importance to health actuarial practice: o Long term care insurance, This is very new to Malaysia. Probably one or two life insurance companies are working on such products. No significant market size. o Income replacement insurance, I suppose this refer to Disability Income Insurance. This is again limited to life insurance companies. Very few insurance companies sell this product. Not large business volume. o Private medical insurance to supplement social health insurance system, Private medical insurance contribute to less than 10% of the medical expenditure in Malaysia. The insurance products are limited to medical expenses insurance which include: Hospitalization and surgical insurance Clinical Insurance Dental Insurance Maternity Insurance Major Medical Expenses Insurance Products were traditionally designed with inner limits for each benefit. However, of late there is a move towards providing more comprehensive plans that pay expenses as charged by healthcare providers without imposing inner limits. There is, however, an annual overall limit to each policy. Most policies are optionally renewable each year. However, some insurance companies have recently introduced guaranteed renewable policies for individuals. These guarantee renewable policies

3 usually carry conditions that allow for review of insurance premium on a portfolio basis and may have lifetime limits. o Critical illness insurance and other supplemental health insurance products Life insurance companies traditionally sell critical illness insurance. The list of critical illnesses varies from company to company. The Life Insurance Association of Malaysia (LIAM) is now standardizing this list. The life insurance industry is expected to adopt this proposed list. At least two general insurance companies are now selling yearly critical illness insurance policies. However, most general insurance companies feel that critical illness insurance is a long term insurance and is more suitable for life insurance companies. o Full coverage medical indemnity and managed care, Malaysia does not have full coverage medical indemnity and managed care. Based on the Insurance Act 1963, only licensed insurance companies can assume insurance risks for a premium. Guidelines from the Director General of Insurance prohibit Managed Care Organisations (MCO) from selling insurance. In view of the existing regulations, the role of MCOs is limited to third party administration only. Such services may be available to organizations that are self-insured or to insurance companies that outsource claims administration. Where insurance companies outsource claim administration to MCOs, approval is needed from the Director General of Insurance. Insurance

4 companies are also required to be solely responsible for the registration of claims and the approval of all claims. o Other health insurance products. Other health insurance products available are limited to extension of the basic policy to insure the following benefits as separate benefits with separate limits: Organ Transplantation Out-patient Cancer Treatment Out-patient Kidney Dialysis Out-patient Physiotherapy Treatment Mental Illness Treatment Include a short statement of where private sector health actuarial practice might evolve to in the next 5 to 10 years and the key issues that will drive growth. The private sector health actuarial practice might evolve into a larger practice if the government were to privatise the healthcare delivery system where the private sector would be the primary provider of healthcare. Currently more than 80% of the health expenditure are incurred in government hospital where utilisation and cost are not fully monitored and managed. Furthermore, the actuary s role in health practice is relatively unknown as very few actuaries have ventured into this area of practice since the private health insurance market is still quite small.

5 Comment on areas where the international actuarial community through IAA might be able to contribute to growth of private health insurance and/or health actuaries. The IAA could have discussions with the Ministry of Health officials to introduce new concepts in private health insurance or how to manage the healthcare system and introduce the actuarial role in healthcare if the government decide to maintain the public healthcare system. Public Sector Health Actuarial Practice Are health actuaries involved in your Country's public sector health programs? If yes, please describe their involvement. If no, why not? No. The public health programs are quite poorly managed and data is not readily available. Very few facilities have IT systems to capture data. I believe the administration processes of the public health sector need to improve significantly before any actuarial role can be introduced. Identify areas where the international actuarial community through IAA might be able to contribute to growth of public health insurance and/or public health actuaries. The IAA could introduce management processes which are geared towards data collection and analysis and to emphasize the importance of actuarial expertise in data analysis and claims management.

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