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Jun 2024

Charting a new path for healthcare

Source: Asia Insurance Review | May 2024

Healthcare made headlines last year when Prime Minister Anwar Ibrahim announced a significant allocation of MYR41.22bn for the Ministry of Health in Budget 2024, marking a notable increase of approximately 13.5% from the previous year’s allocation of MYR36.3bn in Budget 2023. Malaysia is not alone in this phenomenon, with its neighbouring countries also expecting an increase in healthcare expenditure. Singapore has also projected a rise in total expenditure for 2024 to a total of S$18.77bn, S$825.84m higher than the revised FY2023 total expenditure.
By Allianz Life Malaysia
 
 
Following the aftermath of a global pandemic that witnessed more than 13bn vaccine doses being administered as of June 2023, the importance of health has never been more pronounced. According to data from the US International Trade Administration in January 2024, personal healthcare expenditures in Malaysia are projected to double to MYR13.3bn ($2.8bn) by 2028. As individuals become more attuned to their health needs, the demand for comprehensive health insurance coverage is likely to grow, mirroring the increasing financial investment in healthcare services.
 
This trend is further fuelled by the growing affluent middle-class demographic in Asia. The share of health insurance in Asia has already tripled over the past decade and is anticipated to accelerate twofold over the next decade.
 
There is significant potential for the health insurance market to play a bigger role in Malaysia and its surrounding region.
 
Redefining the role of insurers
Amidst medical advancements and stronger demand for healthcare services, the landscape of healthcare is transforming at an accelerated pace, and we must relook at the role of insurance companies in championing sustainable healthcare practices. This starts with taking a long view to understand how the healthcare ecosystem will be shaped and considerations for insurers when tailoring products.
 
As a leading insurer in the Asia-Pacific health landscape, Allianz Asia Pacific’s purpose is to provide security for our customers’ futures and ease their burdens when major events occur, bringing them peace of mind. The trust and reputation cultivated worldwide are instrumental in providing the strong foundation that Allianz stands on in the region, operating in nine markets across 14 operating entities to support the demand for health insurance. Our strength lies in our network, and bringing the power of Allianz together in any market makes us more successful than if we were to operate individually.
 
While we stand on a solid foundation for health, the responsibility to provide affordable access to quality healthcare is a collective one and requires partnership among all stakeholders. In that spirit, we organised the inaugural Allianz Asia Health Summit in 2024, uniting our global operating entities, insurers, regulators, providers and distributors to engage in dynamic, in-depth and meaningful discussions on tackling medical inflation, health propositions and the emergence of health tech.
 
We were honoured to have Tan Sri Dato’ Seri Dr Noor Hisham Abdullah as a panellist at the summit and for his support in the launch of our Health Centre of Excellence headquartered in Kuala Lumpur, Malaysia. Takeaways from the summit’s panels were on the effective containment of medical inflation, on the latest medical technologies available for early detection of illnesses, ensuring the effective utilisation of data and AI and how insurers can adapt to emerging medical technologies to bring greater value to customers.
 
Anusha Thavarajah“We have all the right ingredients to propel our health footprint in Asia. Through strategic collaborations and synergies among all players within the healthcare value chain, we can ensure a collective win to make a difference in each life we touch. From governments to insurers, regulators, providers and distributors, each voice adds a unique perspective to health insurance – a safety net against unforeseen health challenges. Together, we shape a resilient tomorrow, ensuring our customers find comfort in well-rounded protection,” said Allianz Asia Pacific regional CEO Anusha Thavarajah.
 
Collective responsibility at the core
With a growing middle class and the implementation of supportive government policies, more individuals and families are recognising the importance of health insurance as a safeguard against the financial risks of illness and health-related issues.
 
Although there is a shift in consumer sentiment towards health security, out of pocket healthcare expenditure remains high in Asia, north of 30%, which is notably higher than mature markets like Germany, the UK and the US, which is around 10%.
 
Furthermore, Post COVID, countries in Asia are seeing mid to high-teens medical inflation, due to increased cost across the value chain which may be attributed to current economic and geopolitical challenges. The medical care cost in Asia Pacific rose from 7.2% in 2022 to 9.9 % in 2023 and the cost trend is anticipated to remain at 9.9% in 2024. This, coupled with the strain of an ageing population and the costs associated with rapidly developing new procedures, has caused an overall rise in medical costs impacting everyone, including our customers.
 
It is the collective responsibility of insurance companies, governments, service providers and the community to address and ensure costs remain stable in the long term while reducing the out-of-pocket expenditure, and to ensure the financial security and future well-being of people. Responsibility at every step of the healthcare value chain ensures that patients are receiving the right care, hospitals are prescribing more precise treatments for medical conditions and insurance companies can adjust their premiums for individuals appropriately. This drives further advancements in medical healthcare, increases insurance accessibility and improves insurance affordability for everyone.
 
Pantai Hospital Kuala Lumpur CEO Erica Lam said, “To ensure accessibility and affordability in healthcare, hospitals in Malaysia are gradually shifting the paradigm from doctor-centric care to patient-centric care as a mid to long term initiative. Creative and innovative ways to lower the cost of medication are approached, but most importantly, medical practitioners will need to focus on preventative medicine to keep rising medical inflation in check.”
 
Transforming healthcare with a Regional Health Centre of Excellence
Despite growing interest in healthcare, insurance penetration in Malaysia as of 2020 remains relatively low at only 54%, below the global average of 68%. To increase insurance penetration, we are developing better plans and value propositions in healthcare, while advocating for the 3Es – Early Detection, Early Intervention and Early Treatment for our customers.
 
We recognise the significant role insurers play as we engage with our customers at various stages, catering to their diverse needs, with the goal of providing support to those who rely on us. This starts from comprehensive health services, suitable products, access to networks and effective claims management, supported by health analytics and human capital. By adopting a collaborative mindset, we ensure that we do right by our customers through sustainable solutions that are tailored, accessible and future oriented.
 
Allianz Asia Pacific recently launched a Regional Health Centre of Excellence (CoE) in Malaysia, dedicated to implementing the best of health from within Malaysia to our entities across the region. The CoE will leverage the best-in-class assets created regionally to provide tailored products and experiences for customers.
 
Our commitment to enhancing healthcare accessibility in Malaysia reflects a broader effort to address evolving healthcare needs, foster innovation and forge collaborative partnerships across the industry as we usher in an era of sustainable healthcare. As an insurer, we have a responsibility towards our customers, to ensure continued access to healthcare.
 
Ms Thavarajah said, “The reality is that we are all customers in navigating the healthcare ecosystem. Each one of our customers’ journeys echoes in us and that is why Allianz places them at the heart of our strategy, not just in Asia, but globally.” A 
 
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