New policy caps Malaysia’s health, takaful premium hikes under 10%

Medical cost inflation in Malaysia reached 15% in 2024.

Bank Negara Malaysia (BNM) has introduced interim measures, in collaboration with the insurance and takaful industry, to mitigate the financial impact of premium adjustments for medical and health insurance/takaful (MHIT) products.

These measures aim to provide immediate relief to policyholders whilst ensuring continued access to MHIT coverage, as broader healthcare reforms are pursued to address rising medical costs in Malaysia.  

Medical cost inflation in Malaysia reached 15% in 2024, significantly higher than the global and Asia-Pacific average of 10%. 

This surge, driven by advancements in medical technology and the rising prevalence of non-communicable diseases, has strained insurers’ ability to balance claims and premiums. Periodic premium adjustments are necessary to maintain the sustainability of MHIT products.  

Interim measures
MHIT premium adjustments will be phased over a minimum of three years, effective until the end of 2026. This measure is expected to cap annual premium increases for 80% of policyholders at under 10%.  

Policyholders aged 60 and above under the minimum plan of their MHIT product will have premium adjustments paused for one year starting from their policy anniversary.  

Policyholders whose MHIT policies lapsed or were surrendered in 2024 due to repricing can reinstate their coverage under the adjusted premium without additional underwriting requirements.  

Insurers and takaful operators (ITOs) will provide alternative MHIT products at the same or lower premiums for policyholders unwilling to continue their repriced plans. No additional underwriting or switching costs will apply, and these alternatives must be available by the end of 2025.