The government has cautioned that extending the current interim measures aimed at managing rising medical insurance premiums could threaten the long-term sustainability of health insurance products.

Deputy Finance Minister Lim Hui Ying said the temporary steps introduced by Bank Negara Malaysia (BNM), in collaboration with the insurance and takaful industry, were meant only as short-term support for policyholders affected by medical inflation.

“Continuing these measures beyond three years would affect the sustainability of health insurance products,” she told the Dewan Rakyat. “The challenge of medical inflation is complex and requires a whole-of-nation approach.”

The interim measures, implemented in 2024, capped premium increases at 10% for most policyholders. Individuals who had cancelled or allowed their policies to lapse due to higher premiums were also allowed to reinstate their coverage at no cost.

Lim added that under the RESET strategy, a new basic product is being developed to offer sustainable and affordable protection, expected to be launched in early 2027.

BNM will continue monitoring compliance with these interim measures and take firm action against insurers or takaful operators who fail to adhere to the rules.

New Basic MHIT Product to Offer Greater Transparency and Affordability

Meanwhile, the government’s upcoming Medical and Health Insurance/Takaful (MHIT) product is designed to provide Malaysians with more transparent and reliable healthcare protection while addressing rising medical costs.

Finance Minister II Datuk Seri Amir Hamzah Azizan said the new basic MHIT product aims to reduce reliance on temporary relief measures by offering a more sustainable alternative for both new and existing policyholders.

“The basic MHIT product will provide financial protection against inpatient hospitalisation costs, with a higher level of transparency for all parties,” he said during the committee stage debate on the Supply Bill 2026 in Parliament.

The product will also expand coverage to selected outpatient treatments and post-discharge care, ensuring broader and fairer access to essential medical services.

Policyholders will continue to enjoy an extensive hospital network, supported by improved arrangements to manage healthcare cost drivers, ensuring premiums remain affordable in the long run.

Standalone Protection, Not Investment-Linked

Amir clarified that the new MHIT product will be a standalone protection plan, not one tied to investments.

For Investment-Linked Policies (ILPs), BNM has already introduced stricter regulations requiring annual disclosures to policyholders. These include details on investment performance and the sustainability of current premiums to maintain protection until the end of the policy term.

Policyholders who face disputes may contact their Insurance or Takaful Operators (ITOs) directly, or reach out to Bank Negara Malaysia for assistance.

While ILPs offer level premiums, where the amount paid remains consistent throughout the policy term, Amir noted that these can still be affected by medical inflation. He added that BNM is currently reviewing the status of medical plans sold as riders attached to ILPs to ensure greater clarity and protection for consumers.

Coordinated Reform to Curb Medical Inflation

To address medical inflation more effectively, a joint committee co-chaired by the Ministry of Health and Ministry of Finance has been established. The committee will coordinate reforms aimed at improving cost transparency, efficiency, and sustainability within Malaysia’s healthcare financing system.

Both ministries are expected to work closely with BNM and industry stakeholders to ensure that future medical insurance and takaful products are affordable, transparent, and resilient against rising healthcare costs.

The government remains committed to introducing the new basic MHIT product by early 2027, marking a key step towards a fairer and more sustainable medical insurance system for all Malaysians.

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