20th December 2024 - 2 min read
Bank Negara Malaysia (BNM) has unveiled interim measures to alleviate the financial burden on policyholders affected by escalating premiums for medical and health insurance/takaful (MHIT) products.
Under these measures, insurance and takaful operators will cap annual premium adjustments for most policyholders at under 10% and spread these changes over a minimum of three years, ensuring that coverage remains accessible despite rising medical costs.
For policyholders aged 60 and above, premium adjustments for basic plans will be paused for a year, offering crucial relief to those most vulnerable to financial pressures. Additionally, lapsed or surrendered policies from 2024 can be reinstated without further underwriting, and policyholders wishing to switch to alternative, lower-cost MHIT products will be allowed to do so without additional costs or health assessments.
These measures come as medical cost inflation in Malaysia has surged to 15% in 2024, far outpacing the global and regional average of 10%. Advancements in medical technology, combined with a growing prevalence of non-communicable diseases, have driven unprecedented demand for healthcare services, leaving insurers and takaful operators grappling with claims that outstrip premium collections.
BNM also stressed the urgency of comprehensive reforms to address the root causes of rising costs. A RM60 million fund, jointly contributed by the government, insurers, and private hospitals, has been established to accelerate these reforms.
This includes implementing a Diagnosis-Related Group payment model, increasing transparency around medical procedure costs, and advancing the development of a base MHIT product to cover essential healthcare needs. Policyholders aged 60 and above will also be supported in transitioning to this new product once it becomes available.
“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,” Bank Negara Malaysia Governor Dato’ Seri Abdul Rasheed Ghaffour said.
Samuel writes about personal finance and financial news, focusing on how banking updates, policies, and promotions affect everyday money decisions. He enjoys making complicated financial topics easier to follow. Outside of writing, he spends his time watching TV shows and occasionally convincing himself he will only watch one episode.
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