The Malaysian government, insurance and takaful operators, and private hospitals will contribute RM60 million to fast-track health reforms, according to the central bank.
The funding will support the implementation of a Diagnosis-Related Group payment model, the publication of costs for common medical procedures to enhance transparency, and the development of a base Medical and Health Insurance/Takaful (MHIT) product covering essential healthcare needs.
Insurers and takaful operators that do not currently offer appropriate alternative MHIT products must make them available by the end of 2025.
Healthcare costs in Malaysia have surged by 15% in 2024, driven by advancements in medical technology and the increasing prevalence of non-communicable diseases, leading to greater demand for healthcare services.
This has caused claims paid by insurers and takaful operators to grow faster than premiums collected, putting pressure on the sustainability of MHIT products.
As part of interim measures, Bank Negara Malaysia (BNM) announced that insurers and takaful operators will stagger premium increases over a minimum of three years.
This measure will remain in place until the end of 2026, ensuring at least 80% of policyholders experience yearly premium adjustments of less than 10%.
Premium adjustments linked to moving to a higher age band will be managed separately by operators.
Policyholders aged 60 and above on minimum MHIT plans will see a one-year freeze on premium adjustments due to medical claims inflation.
Additionally, policies surrendered or lapsed in 2024 due to repricing can be reinstated without new underwriting.
Broader reforms are also underway to reduce drug prices, enable digitalisation for electronic medical records to minimise repeated tests, and implement strategic purchasing by public and private sectors to manage medical cost inflation.
BNM is collaborating with stakeholders, including the Ministry of Health and private hospitals, to strengthen efforts in addressing these challenges.
Bank Negara Malaysia’s Governor Dato’ Seri Abdul Rasheed Ghaffour emphasised the need to tackle the root causes of rising medical and health insurance premiums.
“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,”
he said.
While these interim measures provide temporary relief to policyholders, broader health reforms must be expedited to ensure long-term solutions.
BNM will periodically review these measures based on the progress of reforms to ensure the affordability and sustainability of MHIT products.
Policyholders can contact their respective insurers or takaful operators from 15 January 2025 for details on the latest measures.
In addition to these measures, BNM is set to issue licenses under its Digital Insurers and Takaful Operators (DITO) framework, aimed at fostering innovation and enhancing access in the insurance sector.
Featured image credit: Edited from Freepik
