Bank Negara Malaysia (BNM) has introduced interim measures in collaboration with the insurance and takaful industry to assist policyholders facing premium revisions in medical and health insurance/takaful (MHIT) products. These measures aim to provide temporary relief while preserving access to health coverage amidst a sharp rise in medical costs in Malaysia.
The cost of healthcare in Malaysia has grown significantly, with medical cost inflation reaching 15% in 2024—well above the global and Asia-Pacific average of 10%. This increase is attributed to advancements in medical technology and the rising prevalence of non-communicable diseases, which have fueled demand for healthcare services.
In light of this, BNM emphasized, “Claims paid out by insurers and takaful operators (ITOs) have grown faster than the premiums collected. While ITOs maintain reserves to cover unexpected increases in medical claims paid, this cannot be sustained if the cost of claims continues to increase beyond reasonable estimates. Hence, periodic adjustments to MHIT premiums are necessary to ensure that policyholders’ claims can continue to be met.”
BNM Governor Dato’ Seri Abdul Rasheed Ghaffour elaborated:
“We need to address the root causes of rising medical and health insurance and takaful premiums which are driven by higher medical costs and utilisation of medical services. The design of MHIT products must also be improved to make them more sustainable and aligned with value-based healthcare that prioritises better health outcomes.
“This is a complex challenge that requires the concerted action of all stakeholders across the healthcare ecosystem. These interim measures that we are announcing today will provide some temporary support to policyholders, but broader health reforms must be expedited with a commitment to achieve clear outcomes in the coming years. We are working closely with relevant stakeholders including the Ministry of Finance (MOF), Ministry of Health (MOH), private hospitals and ITOs. All parties have been supportive and committed to work out a long-term sustainable solution to this complex issue.”
Interim Measures for Policyholders
BNM has introduced the following measures to assist policyholders:
- Gradual Premium Adjustments: Premium increases will be spread over at least three years, with annual adjustments due to medical claims inflation capped at 10% for 80% of policyholders. This policy will remain in effect until the end of 2026.
- Relief for Seniors: Premium adjustments for policyholders aged 60 and above will be paused for one year if they are covered under the minimum plan of their MHIT product.
- Policy Reinstatements: Policyholders whose policies lapsed or were surrendered in 2024 due to repricing can request reinstatement without additional underwriting, based on adjusted premiums.
- Alternative MHIT Products: ITOs must offer alternative MHIT products at the same or lower premiums, with no underwriting or switching costs. These options will be available by the end of 2025.
Policyholders will be informed about these measures starting January 15, 2025.
To address the root causes of rising premiums, the government, ITOs, and private hospitals will jointly contribute RM60 million toward health reforms. These initiatives include the implementation of a Diagnosis-Related Group (DRG) payment model, increased transparency in the cost of common medical procedures, and the development of a base MHIT product to cover essential healthcare needs.
“BNM and all stakeholders including MOH, private hospitals and ITOs are committed to continue strengthening our collaborative efforts in containing medical cost inflation effectively,” BNM stated.
Part of the fund will support the transition of policyholders aged 60 and above to the new base product once it becomes available.
BNM assured that it will monitor the progress of these reforms to ensure they achieve their intended outcomes. The interim measures will be reviewed periodically in line with advancements in the healthcare ecosystem.
