PETALING JAYA: Medical inflation could have contributed to the high medical claims payout in 2025, says Dr Saravanan Thambirajah.
The Consultative Council on Private Healthcare Costs member said medical inflation is a key driver, given the rise in the cost of hospital stays, specialist consultations and diagnostic tests, adding that the increase in rates is significantly higher than general inflation.
“The rising insurance payouts, particularly medical claims, which now form the largest portion, indicate a sustained increase in healthcare costs and utilisation. This is not just a normal trend; it reflects systemic pressures within the healthcare system, including rising hospital charges, more frequent treatments and possibly more complex or chronic conditions among the population,” said Saravanan, who is also the chief executive officer of the Federation of Malaysian Consumers Associations.
He said the trend signals deeper structural issues.
“The sharp rise in claims, especially in the private healthcare sector, points to weak cost controls and limited transparency in pricing. It raises serious concerns about the effectiveness of regulatory oversight on private healthcare charges and utilisation,” he said.
He said there is an urgent need for the government to strengthen regulation, improve price transparency and ensure accountability among private healthcare providers.
“Without intervention, the current trajectory is unsustainable and will continue to erode consumers’ ability to access affordable healthcare,” he said.
Sunway University economics professor Dr Yeah Kim Leng said medical inflation, estimated at 11–12% annually, is a key factor.
“Other probable causes, such as rising insurance penetration where more people are covered, increasing health issues related to critical illness and non-communicable diseases, as well as an ageing population, could have also contributed to the record high claims.
“Post-Covid-related health problems could also be a factor for the surge in payout claims,” he said.
The sharp increase, he said, could be due to a high claims ratio that causes insurance companies to make losses, thereby rendering the risk-pooling insurance programmes unsustainable.
“Higher insurance premiums render such schemes unaffordable, especially to the low, middle and upper middle income households.
“In turn, the healthcare burden is shifted to government hospitals and clinics, thereby necessitating higher budget allocation for the health sector,” he said.
Guided by the Parliament-approved Health White Paper, critical reforms are being pursued by the Health Ministry to address the challenges ranging from financing, manpower training to resource allocation while optimising the provision of public and private healthcare services,” he added.
Life Insurance Association of Malaysia’s 2025 annual report revealed that medical claims increased by 5.3% from RM8.9bil in 2024 to RM9.4bil in 2025.
The payout accounted for the largest share of the claims in 2025 at 53.9%.
The report revealed that the amount of claims payout for death, disability, medical, bonuses and others increased by 3.4% from RM16.8bil in 2024 to RM17.4bil in 2025.
Disability benefits, which accounted for 0.9% of the total payout, recorded the largest increase of 77.4% from RM89mil in 2024 to RM157.9mil in 2025.
The total payout for claims amounted to RM17.4bil last year, up by 3.4% from RM16.82bil in 2024.
