The new co-payment rule for health insurance policies is set to take effect on March 20, but should affect only 5% of health insurance policyholders, says the Thai Life Assurance Association (TLAA).
Nusara Banyatpiyaphod, president of the TLAA, said co-payment only applies to policy renewals and new policies from March 20.
Last year Thailand's medical inflation rate soared by 15%, as reported by Willis Towers Watson (WTW), significantly higher than the general consumer inflation rate.
The rising cost of medical treatment is driven by several factors, including an ageing population, emerging diseases, air pollution, medical advancements and healthcare system structures.
Increasing healthcare costs led to a continuous uptick in health insurance claims, posing a major challenge for the insurance industry, she said.
Under the co-payment guidelines, policyholders must pay 30-50% of their insurance claims that exceed a specified limit.
"However, this group is a minority, so the overall insurance system is not expected to experience a decline," said Ms Nusara, also chief executive of Ocean Life Insurance.
According to WTW, Thailand had the highest average medical inflation rate in the world, as the global and regional average was 10% last year. Thailand's medical inflation has risen by 8-15% per year, driving up insurance costs and creating financial pressure beyond the industry's control.
She said health insurance claims have been rising due to minor illnesses (simple diseases). The new health standard, in effect since 2021, ensures insurers continue to support policyholders, reinforcing confidence in health insurance.
During the peak of the Covid-19 outbreak in 2020-21, when the disease was emerging, there was a surge in insurance claims, even in cases that were not severe. This resulted in insurance premium miscalculations, meaning they were insufficient to cover actual medical expenses, directly affecting the health insurance system.
As a consequence, insurers had to adjust premiums across entire portfolios, making health insurance less accessible to the public and potentially affecting the healthcare system, said Ms Nusara.
"The insurance industry must strategically address this challenge to ensure health insurance continues to serve as an effective risk management tool and provides financial relief for medical expenses," she said.
To promote sustainability, the insurance sector introduced the co-payment system as a renewal condition, aiming to reduce claims from unnecessary hospitalisations that would lead to premium increases across entire insurance portfolios.
The co-payment mechanism does not apply to major surgeries or critical illnesses.
For simple diseases or conditions that do not require hospitalisation, if a policyholder submits three or more claims per policy year and the total claims exceed 200% of the health insurance premium, they must co-pay 30% of all medical expenses in the following year.
For general illnesses excluding major surgeries, if a policyholder submits three or more claims per policy year and the total claims exceed 400% of the health insurance premium, they must co-pay 30% of all medical expenses.
If a policyholder meets both of these conditions, they must co-pay 50% of all medical expenses the following year.
If a policyholder is subject to co-payment upon renewal, they are required to pay 30% to 50% of medical expenses, depending on their claim history. If their claim frequency and amount decrease and no longer meet the co-payment criteria, the insurer may consider removing the co-payment requirement, returning the policy to standard status in the subsequent year.
In practice, the co-payment requirement upon renewal is not easily triggered, as there are multiple assessment layers in place, said Ms Nusara.
