By Sharen Kaur - July 1, 2025
KUALA LUMPUR: Malaysia's insurance and takaful industry is confronting an uncomfortable truth: despite more than a century of operations, strong global brands, and modern digital tools, over half of the population remains uninsured or underinsured.
For an industry built on protection, this isn't just a statistic - it's a wake-up call, said Ravinder Singh, a veteran who has spent more than a decade pushing online insurance solutions forward.
"Let's face the hard truth. Sixty per cent of Malaysians still have no insurance or takaful. That means over 300 of the 550 people who die daily leave no protection for their families. For an industry that's been here for over a century, with all the world's biggest insurers, this is unacceptable," he said in the latest episode of Beyond the Headlines, which also featured Rhenu Bhuller, an experienced healthcare strategist with deep roots across Asia-Pacific.
Ravinder - who is a reinsurer, actuary and advocate - said this protection gap reveals a deeper structural challenge: reaching groups who have long been underserved, especially the M40 and B40 income segments, gig workers, and rural households.
"The most vulnerable are the M40 and B40 segments, who have limited savings and often large families. Only online, direct channels with simple and affordable products can close this gap. And until we do that, I have no plans to retire."
He believes closing this gap will require more than just digital apps or brochures. To keep premiums sustainable post-retirement, he proposes actuarial and subsidy models that spread the cost over time.
One solution is lifecycle pricing with cross-subsidisation. "This is where policyholders pay slightly higher premiums during their earning years to lock in more stable rates post-retirement. It works well for life and savings products, but not for medical insurance. That's because medical inflation and the emergence of costlier treatments keep pushing healthcare costs up," Ravinder said.
He suggested a fresh approach: unlock unused value. "Many Malaysians hold two medical policies (employer and private) but can only claim from one. Instead of insurers pocketing that surplus, it could roll into a health savings account to offset future premiums. A matching contribution from employers or the government would sweeten the pot," Ravinder said.
Ravinder also sees "longevity credits" as part of the solution - rewarding people who maintain good health with more stable premiums. This could be tied to employer health checks or programmes like Perkeso's SEHATI, which provides free screenings for people aged 40-59.
Meanwhile, he said despite heavy investment in digital, self-service insurance sales still account for less than 10 per cent of total policies.
"Insurance is still seen as complex and low-trust. Where it has worked, like in microtakaful or basic term products, it's because the value is clear, the pricing is transparent, and claims are simple.
"We're in a hybrid phase now. The goal of self-service isn't just to digitise forms but to remove friction. That means guided journeys, smart defaults, and even trial coverage for specific communities." es.
Ravinder added that consumer sentiment remains a hurdle.
"Too many people still see insurance as confusing or, worse, a scam. The fix isn't more talks; it's real experience. Education alone won't shift sentiment.
"People only understand it once they own a policy. Start with small, affordable plans. Once they're protected, they get curious, they ask questions, and they learn."
One area that Ravinder says can help plug the gap is critical illness (CI) coverage. "CI is a good complement to — or even a substitute for — medical insurance. Unlike medical plans, CI premiums are fixed once bought."
He pointed out that for a healthy 40-year-old, an RM100,000 CI policy can cost less than RM1 a day on many online platforms.
"The key is to buy early. Also, you don't need coverage for all 46 diseases. The "Big 5" illnesses, such as cancer, stroke, heart attack, kidney failure, and major organ transplant, account for the vast majority of claims. Keeping it simple makes it affordable and accessible," he said.
For Ravinder, the message is clear: the industry must innovate beyond products, rethink pricing and distribution, and deliver simple, tangible value to those who need it most — and can least afford to go without.
As healthcare systems worldwide brace for a turbulent decade, Malaysia's own system stands at a pivotal crossroads — grappling with the same mounting challenges that have forced developed nations to rethink how they deliver care.
"It's clear that we're dealing with a complex interplay of five major forces – demographic shifts, economic pressures, workforce shortages, the acceleration of digital transformation and rapid technological change," said Rhenu.
The stakes are high. Countries everywhere are wrestling with how to make healthcare more accessible, financially sustainable, and truly patient-centred, especially as ageing populations and rising costs from advanced treatments and administrative inefficiencies strain budgets, she said.
"We're dealing with a complex interplay of five major forces — demographic shifts, economic pressures, workforce shortages, the acceleration of digital transformation, and rapid technological change," said Rhenu.
While digital health solutions hold great promise, Rhenu cautions that issues like fragmented data, cybersecurity risks, and uneven adoption must be addressed head-on.
"The challenge is scaling technology without overwhelming clinicians or widening health inequities," she said.
She highlighted widening gaps in care by geography, income and ethnicity, as well as growing mental health needs among youth and the elderly. Women's health, she added, also continues to lag behind.
"These challenges are interconnected, and solving them will require bold leadership, cross-sector collaboration, and a willingness to rethink how healthcare is delivered and financed," she said.
Drawing on her work in Singapore, Australia, and Switzerland, Rhenu believes Malaysia has proven models it can adapt — provided they fit local realities.
"I am sure our relevant departments have studied other healthcare models and every country curates what fits its unique context, but I will share 3 contrasting examples from countries I have lived in and personally experienced the healthcare systems of, all of which utilise a blend of shared services between public and private systems and insurance tailored to suit local situations."
She said Singapore, for instance, is tackling rising costs, expected to nearly double to S$43 billion by 2030, with a balanced strategy of fiscal discipline, innovation, and inclusion. Its 3M Framework — Medisave, MediShield Life, and Medifund — ensures that even the most vulnerable citizens have access to care.
In Switzerland, mandatory private insurance is balanced by robust government oversight and local accountability. Nearly 30 per cent of residents receive subsidies for their premiums, managed by cantonal governments that also oversee hospital services to reflect local needs while maintaining national standards.
Australia, meanwhile, shows how strong public-private partnerships and an integrated digital health strategy can work in practice. "Their National Digital Health Strategy is a great example of using real-time data to guide care and shape policy," she noted.
Malaysia, too, is ramping up its digital health push, from smart hospitals to interoperable health records, but Rhenu warns that technology must be designed around real people.
"One critical lesson from Australia and South Korea is the importance of designing digital health strategies around the patient, not just the system. That means prioritising user-friendly interfaces, multilingual access, and seamless data sharing between providers."
She added that digital solutions must reach beyond urban centres to truly serve rural communities through scalable, mobile-first approaches.
Fragmented data and weak cybersecurity protections remain big hurdles. Just as crucial, she said, is ensuring healthcare professionals are ready to adopt and use these tools with confidence.
"Ongoing digital upskilling must be a priority," she stressed. "Technology alone won't fix the system — people will."
Rhenu sees a clear multi-pronged pathway for Malaysia to balance universal healthcare with the rising costs of advanced care and continuous innovation.
She said one critical pillar is a sustainable funding framework, which could include a national health insurance scheme that pools risk across the population, similar to South Korea's model.
"This would reduce reliance on out-of-pocket payments and create a more sustainable funding base for both basic and advanced care. Switzerland blends mandatory private insurance with strong public oversight. While insurers are private, the government regulates pricing and ensures universal access. This model fosters innovation while maintaining equity and cost control."
She also called for stronger public-private partnerships to expand capacity without overstretching the public sector. By integrating private providers into national strategies through shared services, co-financing arrangements, or outcome-based contracts, Malaysia could deliver more care where it's needed most, she said.
Another priority is a sharper focus on value-based healthcare. This means rigorously assessing treatments and technologies for their cost-effectiveness and measurable health outcomes.
"Every ringgit should deliver clear, proven results for patients," she said, adding that a value-based approach ensures spending remains sustainable while improving care quality.
Rhenu also stressed the need for greater investment in prevention, including early detection, health education, and chronic disease management, to help reduce the costly burden of hospital admissions down the line.
She further recommended encouraging voluntary supplemental insurance alongside universal coverage.
"Maintaining universal access to core services is essential, but giving people the option to purchase additional private coverage for elective or advanced procedures helps preserve fairness while offering more choice," she said.
Rhenu added that balancing these solutions will require strategic trade-offs, but the end goal must be clear: stretch every ringgit wisely while safeguarding universal access for all Malaysians.
Transparency and accountability will be vital to earning and maintaining public trust, she said.
Rhenu's ultimate vision is a system that breaks the "postcode effect", where the quality of care depends more on where you live than on what you need.
"Around the world, we've seen how living in the wrong district can mean longer waits, fewer specialists, or limited preventive care. Countries are tackling this with regional networks, equity-based funding, and mobile services.
"It is important for us to embed geographic equity into health planning. Malaysia's healthcare system is at a critical inflection point. My vision is for us to have a system that is resilient, inclusive, and rooted in people's everyday realities.
"That means supporting our ageing population with home-based and community care, investing in preventive health, and recognising the vital role of family carers. We must also close equity gaps so that whether you live in a city or a rural kampung, you get the care you deserve," she said.
With bold leadership, cross-sector partnerships, and a willingness to rethink old models, Rhenu believes Malaysia can meet this moment and build a healthier, more equitable future for all.
Source: https://www.nst.com.my/business/corporate/2025/07/1238238/wake-call-insurance-industry-rising-medical-costs-watch
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