KUALA LUMPUR, Dec 16 — Rising insurance premiums are likely to negatively impact the overall cost structure and financial health of businesses, particularly the micro, small and medium enterprises (MSMEs) which typically operate on tight budgets., said the Malaysian Employers Federation (MEF).
Its president Datuk Syed Hussain Syed Husman said the steep hike in insurance premiums may significantly constrain their working capital, leading to tighter cash flows and hindering their ability to invest in essential areas such as digitalisation, new technologies and operational expansions.
"To manage these higher insurance premium expenses, businesses may be compelled to raise prices of their products and services.
"If many businesses pass on increased costs to consumers, this could contribute to broader economic inflation, affecting the general price levels within the economy and decreasing purchasing power of consumers," he said in a statement today, responding to recent reports that insurance providers plan to hike premiums by 40 to 78 per cent.
Syed Hussain called on Bank Negara Malaysia (BNM) and the government to address the proposed hikes.
"Although the health of employees is important to employers, most MSMEs will not be able to afford such an increase in insurance premiums.
"MEF is worried that if the steep increase in insurance premiums is not addressed satisfactorily, many employers will have to reconsider medical benefits insurance coverage to employees," he said.
He added that MEF is of the view that the cost of medical health insurance should be made more affordable so that both individuals and employers will be encouraged to take such insurance coverage.
"Higher insurance premium cost will make some existing policy holders review their policy and some may forgo their policies due to higher cost constraints," he said.
— Bernama
