AS inflation spikes, let us revisit the components of household expenditure. Besides housing and transport, there is also insurance.

Social protections in Penang and Selangor, such as MySalam and cash aid, do cover healthcare and death benefits.

However, these schemes can be better tailored to suit all.

In this article, I will discuss insurance matters from the perspective of governance and policy for the vulnerable.

Positive developments

The last few years saw notable changes related to insurance governance. Continuous improvement in governance in the financial sector earned the confidence of Malaysians in financial institutions, resulting in wider acceptance of new financial products.

In 2019, Bank Negara improved its investment-linked policies (ILP).

Changes include minimised premiums to invest in the unit trusts in insurance policies, standards for sustainability tests (especially on annual review of ILP sustainability), as well as enhancements to product illustration format.

The insurance agent’s conduct has also come under closer scrutiny with more stringent compliance through a balance score card. There is also greater incentive for the agents to meet non-sales KPI.

Insurance innovations for the poor

The B40 group was an underserved segment in insurance before the introduction of a series of  programmes such as Perlindungan Tenang Voucher and MySalam.

Besides multiple assistances for the group, the programmes can complement those of social welfare to better protect the most vulnerable groups.

These encourage the poor to seek medical treatment when they are critically ill and allow them to pay their medical bills with a medical card. The programmes also renders death and funeral benefits to the family of the deceased policy holder.

The Perlindungan Tenang Voucher programme launched in 2017 provides cash aid for B40 households to purchase insurance.

Introduced in 2018, the MySalam programme caters to the most vulnerable groups by providing a one-time payout upon diagnosis of critical illness and a hospital allowance.

These designs provide meaningful coverage for the B40 group, a significant number of whom are daily wage workers and those with low savings. The programmes are designed to discourage them from staying in the hospital for too long and seek more advanced treatment.

MySalam has also expanded the critical illness coverage to 45 diseases and the coverage to the M40 group.

It is a sign of improvement that more life insurance and medical cards with affordable prices are available online

Reduce information asymmetry

For the M40 and T20 groups, good insurance governance is also crucial.

For the bottom 40 earners, there is a need for further consolidation of funds such as eKasih and Bantuan Sara Hidup, for distributive efficiency.

Budget website Manfaat Portal disseminates information about the available assistance programmes.

The government can work with the private sector to organise events such as personal finance seminars for better financial literacy among the public.

The Manfaat Portal could also be developed into an app to convey important messages while the Bantuan Prihatin Nasional database will enable better targeting and reach. – December 5, 2022.

* Nick Tan Beng Teong graduated with Bachelor of Economics at University of Malaya. A member of Agora Society, Tan believes in policy reforms in order to build a better nation.