PETALING JAYA: Bank Negara's measures to address rising premiums for medical and health insurance or takaful (MHIT) products will provide temporary relief to consumers but it leaves some core issues unaddressed, says the Federation of Malaysian Consumers Associations (Fomca).
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"We express grave concerns over Bank Negara's recent announcement on the MHIT premium increase cap of no more than 10% over a three-year period.
"While this interim measure aims to provide temporary relief to consumers, it fails to address the root causes of the escalating costs in private healthcare and the structural issues within the MHIT sector," it said.
Fomca said the proposed cap on premium increases was merely a stop-gap measure that masks the larger issue of excessive profits driven by insufficient government control and regulation of the private healthcare sector.
It urged the government to have greater responsibility in regulating the private healthcare sector, including pricing mechanisms for healthcare services and insurance premiums.
"It is high time that medical insurance policies are regulated by the government to ensure that it meets the needs of the population rather than serving as a profit-centric product for insurers," it added.
Fomca also called on the government to increase public healthcare expenditure to at least 5% of the nation's gross domestic product, in line with the World Health Organization's recommendations.
In a joint statement, the Life Insurance Association of Malaysia (LIAM), the Malaysian Takaful Association (MTA) and General Insurance Association of Malaysia (PIAM) said the measures put forward by the industry were aimed to ease the financial burden on policyholders or participants so they can continue to be covered.
It said insurance and takaful operators (ITOs) will spread out the changes in premiums arising from medical claims inflation over a minimum of three years.
"This measure will remain in place until the end of 2026. With this measure, at least 80% of policyholders or participants are expected to experience yearly premium adjustments due to medical claims inflation of less than 10%," the statement said.
There will also be a one-year temporary pause in premium or contribution adjustment arising from medical claims inflation for those aged 60 and above, who are covered under the minimum plan within the Medical and Health Insurance or Takaful (MHIT) products they purchased.
The three associations also said that policyholders and participants who have surrendered or lapsed their policies or certificates due to medical repricing in 2024 will be eligible for
reinstatement without additional underwriting requirements.
The industry said the interim measures were unsustainable in the long term as they come at a significant cost to ITOs who have to bear the associated financial loss in the meantime.
"We understand the challenges our policyholders and participants may face during this transition, and these interim measures reflect our unwavering commitment to their financial well-being," it said.
