KUALA LUMPUR: Insurance companies will not be allowed to impose steep hikes of premiums on medical policies, Bank Negara Malaysia has announced.
Instead, it has told insurance and takaful operators (ITOs) to spread out premium increases over a minimum of three years, limiting premium hikes to not more than 10% per annum.
For those above 60, there will be no increase in premiums next year, and any increase can only be imposed after the policy anniversary in 2026.
The companies have also been told to make available cheaper insurance plans for policyholders who do not wish to continue their re-priced policies, according to the statement from Bank Negara Governor Datuk Seri Abdul Rasheed Ghaffour.
The central bank said ITOs that do not currently offer these appropriate alternative products must make them available to policyholders by the end of next year.
Opting for the alternative MHIT products should not require any additional underwriting or involve any switching cost.
Bank Negara also said the government, along with insurance companies and private hospitals, will set aside RM60mil for health reforms.
This will be used for the implementation of diagnostic-related group payment models and the publication of costs of common medical procedures.
Part of the fund will also be used to develop basic insurance policies for those aged 60 years and above.
“We need to address the root causes of rising medical and health insurance and takaful premiums, which are higher medical costs.
“The design of these products must also be improved to make them more sustainable and aligned with value-based healthcare that prioritises better health outcomes,” said Abdul Rasheed.
He said the matter was a complex challenge that requires concerted action from all stakeholders, pointing out that the interim measures announced yesterday would provide temporary support to policyholders.
“However, broader health reforms must be expedited with a commitment to achieve clear outcomes in the coming years.
“We are working with the Finance Ministry, Health Ministry, private hospitals and ITOs and are committed to working out a long-term sustainable solution,” Abdul Rasheed added.
The cost of healthcare in Malaysia has grown significantly over the years, with medical cost inflation reaching 15% in 2024 – well above the global and Asia Pacific average of 10%.
Bank Negara said this rise was driven by factors such as advancements in medical technology and the increasing prevalence of non-communicable diseases, which have led to a greater demand for healthcare services.
As a result, ITOs are paying out more than the premiums they collect. Hence, periodic adjustments to MHIT premiums are necessary, say insurers.
