Overall health premium income rose 7% in 2025, the fastest-growing segment of the local insurance market, according to Allianz Research’s Global Insurance Report 2026. The figure reflects a year in which medical inflation ran at 15%, well above the global and Asia Pacific average of 10%.

The Insurance Market In 2025

Malaysia’s overall insurance market grew 3.7% in 2025, with total premium income reaching €15.6 billion (approximately RM72.1 billion). Life insurance, which accounts for more than two-thirds of all premium income, rose 3.1%, while property and casualty insurance, covering motor, fire, and general policies, grew 4.9%. Health insurance remained the smallest segment at €300 million (approximately RM1.39 billion) but recorded the sharpest year-on-year increase.

Malaysia’s overall insurance penetration stands at 3.7% of GDP, below regional peers such as Thailand at 5.1% and Singapore at 7.6%. Over the decade from 2015 to 2025, health insurance premium income grew at an average of 2.1% a year. The 7% jump in 2025 reflects how quickly medical costs accelerated, pushing insurers to revise premiums upward at a pace that caught many policyholders, that’s you, off guard.

Health Insurance Expected To Keep Growing 

Allianz Research projects health insurance premium income to grow at an average of 6.7% a year from 2026 to 2036, in line with its global forecast. Malaysia’s overall insurance market is expected to expand at 5.4% annually over the same period, slightly ahead of the projected global rate of 5.3%. Property and casualty insurance is forecast to grow at 5.6% annually, ahead of the global rate of 4.7%, while life insurance is projected to expand by 5.2%, also above the global forecast of 4.9%.

Premium Hikes, Cancellations, And What Comes Next

The 7% rise in health premium income came against a difficult backdrop for customers. Steep increases in late 2024 triggered widespread complaints, prompting Bank Negara Malaysia to introduce interim measures including spreading premium increases over at least three years, pausing adjustments for policyholders aged 60 and above, and allowing reinstatement of lapsed policies without additional underwriting. By then, many policyholders had already walked away, with affordability cited as the main reason.

Considering methods of reducing cost for consumers, roll-out of the Diagnosis-Related Groups (DRG) system, a fixed-fee hospital payment model designed to control private healthcare costs, has been delayed to 2027. A new base medical and health insurance plan with premiums starting from RM50 is in development, with implementation targeted for end-2026.

With health premiums projected to grow at 6.7% a year through 2036 and the DRG fix still a year away, policyholders on investment-linked plans, where medical coverage is tied to an investment account, face a particular risk: coverage that erodes over time if investment returns fall short or premiums are not topped up. 

If you already have a policy, start by making sure your medical rider is still active and gives you enough coverage for hospital and treatment expenses.

Follow us on our official WhatsApp channel for the latest money tips and updates.

Iman Aminuddin

Iman writes about personal finance with curiosity. She is interested in the stories behind money, the hesitation around big decisions, and the small habits that shape financial futures. Off the clock, she is either dissecting a film or climbing her way up the leaderboard in her favourite games.

About THE AUTHOR

Iman Aminuddin

Iman Aminuddin

Iman writes about personal finance with curiosity. She is interested in the stories behind money, the hesitation around big decisions, and the small habits that shape financial futures. Off the clock, she is either dissecting a film or climbing her way up the leaderboard in her favourite games.

See all articles