Malaysian insurers to cap premium hikes, ensure affordability

Insurers will cap annual premium hikes below 10%.

Malaysian insurers and takaful operators (ITOs) have agreed to spread premium increases until 2026, cap annual premium hikes below 10% for around 80% of policyholders, and offer a one-year premium freeze for those aged 60 and above with minimum coverage plans, as an interim measure.

The Life Insurance Association of Malaysia (LIAM), the Malaysian Takaful Association (MTA), and Persatuan Insurans Am Malaysia (PIAM) met with the Public Accounts Committee (PAC) on 26 February, to discuss strategies to manage rising healthcare costs and insurance premiums in Malaysia.  

Policyholders whose coverage lapsed in 2024 due to repricing will also be allowed to reinstate their policies without new underwriting. 

Additionally, more affordable medical and health insurance and takaful (MHIT) products will be introduced by 2025.  

The industry also outlined long-term recommendations aimed at promoting affordability, transparency, and sustainability in Malaysia's healthcare and insurance ecosystem. 

These include implementing diagnostic-related grouping (DRG) pricing to standardise medical billing, collaborating with Bank Negara Malaysia (BNM) to develop basic long-term sustainable insurance products, and encouraging private hospitals to establish cost-containment units.

Other key proposals include promoting the use of generic drugs to reduce pharmaceutical costs, exempting group insurance from the 8% Sales and Services Tax (SST) to increase employee coverage, and establishing an industry-wide claims database to minimise claim abuse. 

The associations also recommended introducing co-payment models to encourage responsible healthcare consumption and appointing an independent consultant to analyze claims inflation.  

The associations emphasised the importance of a "whole-of-nation" approach involving regulators, healthcare providers, insurers, and policymakers to ensure long-term affordability and sustainability of healthcare services.