Page 66 - MEDICAL AND HEALTH INSURANCE

MEDICAL AND HEALTH INSURANCE

3.2.3 PAYMENT METHOD DISCOUNTS

Payment method discounts are discounts negotiated with providers, on
bills or invoice amounts at a certain percentage. Providers generally do not

give discounts on hospital supplies and services and the only discount

given is on the room and board charges, which average about 10%.

However, special negotiation can be made for extremely large volumes of
business, if the hospitals are in the preferred panel for certain big clients.

The insurer will generally pass on the discount to the claimant to reduce

the overall claim cost so that the overall loss ratio can be maintained with

minimal adjustment of premium in the next renewal policy.

Professional fees cannot be discounted as they are regulated by the 13th
Schedule of the Private Healthcare Facilities and Services (Private Hospitals

and Other Private Health Care Facilities) (Amendment) Order 2013.

3.2.4 EXCESSES

An 'excess' or 'deductible' is a fixed amount that a policyholder must first
pay regardless of the total cost of an eligible benefit. If a deductible of

RM5,000 is applied, the policyholder will have to pay the first RM5,000 of

the total cost of an eligible benefit and the remaining balance will be paid

by the insurer up to the policy overall annual limit.

The use of excesses or deductibles is often a product feature that offers a
lower premium for policyholders and they are held accountable for the

excesses imposed. The amount can be predetermined on a 'by product' or

'by client' basis, as in the case of group PMI. It usually acts as
discouragement to claim, as the policyholder will have to fork out the

excess, and consequently may reduce the incidence of claims.

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