Non-communicable diseases education required in Malaysia

Medical inflation has outstripped core inflation, forcing up health insurance costs. This can be attributed to the rise of non-communicable chronic, diseases. Asia Insurance Review spoke with Zurich Malaysia’s Mr Junior Cho to find out how this can be addressed.

The rising cost of health insurance in Malaysia can be traced partly to the increasing rates of non-communicable diseases (NCDs). Also known as chronic diseases, these have become the foremost cause of health disorders and death in Malaysia over the last decade, according to the Malaysian Ministry of Health’s 2023 health white paper.

Illnesses include cardiovascular disease such as heart disease and stroke, chronic respiratory diseases, cancer and diabetes.

Asia Insurance Review spoke with Zurich Malaysia head and country CEO Junior Cho to find out how to tackle the rising cost of health insurance.

Factors behind medical inflation

According to the paper, rising rates of NCDs in chronic stages have significantly increased patient cost of care, from extensive diagnostics and treatment to prescription drugs and long-term care management. NCD’s can be attributed to lifestyle-related risk factors such as physical inactivity, unhealthy diets and substance abuse, the paper also said.

“Over the past years and even decades, there have been significant disruptions brought on by societal and technological development, from different lifestyles and consumption habits, to shi़ing workplace trends and environmental changes,” Mr Cho said. These have also directly or indirectly led to the increase of NCDs, which have brought health challenges and strains on the national health system.

There are other factors that also directly contribute to medical inflation outstripping core inflation in health insurance and takaful.

“New developments in healthcare technologies, innovations and methods also contribute to this trend, as these often require significant capital expenditure or manpower upskilling, which translate into increased cost prices. “New and expensive drugs, medical equipment and procedures contribute to the rising costs too,” he said.

Addressing the impact on take-up rates

Medical inflation and the resulting rising cost of health insurance have adversely affected take-up rates among consumers in Malaysia, as coverage becomes less affordable.

To address this challenge, insurers and takaful operators should focus on accessibility and inclusivity in product offerings.

Mitigating medical risk

According to Mr Cho, concerted efforts from various sectors would be required to mitigate medical risk. Healthcare providers and the government would need to use education to promote healthier lifestyles and early detection of diseases.

“It is also important to diversify engagement strategies to maximise the effectiveness of outreach programmes, such as through collaborative workshops, public campaigns and educational materials such as infographics,” he said.

Insurers also play an important role. “In addition to providing accessible protection and coverage measures, insurance and takaful operators can spread awareness and information in embracing healthier lifestyles,” he said. This also involves continuous investment in preventive care and leveraging technology for cost and operating efficiencies, he said.

Mitigating cost

Risk modeling has always involved the collection and analysis of data. What has changed in recent years is the volume and resolution of that data and the computing power available to process it. Thanks to these advances, risk modelers are now tackling many of the challenges of predicting climate risks using sophisticated AI and machine learning tools. At Zurich, these tools enable our modelers to make better use of existing data and to fill in the gaps by generating predictions and insights in areas where little or no concrete data or connections existed in the past. For example, we use AI neural networks to create global hazard maps for today’s and future climate. The AI networks generate these hazard maps by combining data from climate models with current hazard maps. Combining different data sets to create new risk insights in this way has been supercharged by the use of AI and machine learning.

Combating fraud in claims

Combatting increasing fraud in claims should be a top priority, and insurers should consistently look for ways to enhance the collection of product claims data, which is critical not only in providing greater transparency but also in enhancing the quality and personalisation of services for policyholders, Mr Cho said.

“We are investing and enhancing robust fraud detection systems to utilise advanced analytics and test machine learning algorithms to identify patterns and anomalies in claims data. These systems help flag suspicious claims for further investigation,” he said.

Strict internal controls and processes could also be implemented to ensure that claims are thoroughly reviewed and validated before payment.

“This includes verifying the authenticity of supporting documents and conducting thorough investigations, when necessary,” he said. Training and awareness programmes for employees and agents could also help in recognising and reporting potential fraud.

Fundamentally, maintaining the integrity of insurance and takaful offerings should be imperative, alongside working to maintain the highest compliance standards, he said. “As deployment of technology is scaled up, we also need to ensure personal data protection and cyber security considerations are all implemented,” he said.

Implementing technology innovatively

Technology is at the forefront of business innovation and is an aspect which has significantly impacted the insurance and takaful industry in Malaysia, according to Mr Cho.

“One aspect of this is in the strategic utilisation of technology in customer engagements, where we have to strike the balance between providing personalised services and seamless convenience,” he said.

“Underpinning all this is the centrality of establishing trust for all stakeholders and consumers, particularly in an increasingly digitalised and interconnected society,” he said.

AI can also be leveraged innovatively for various purposes within insurers and takaful operators, he said. “It provides greater underwriting, claims and risk engineering insights, to provide improved, tailored and optimised customer servicing,” he said.

Note: We would like to extend our appreciation to Asia Insurance Review for featuring Zurich Malaysia's insight in the article "Non-communicable diseases education required in Malaysia"