BNM Announces 4 Interim Measures To Ease Burden Of Rising Insurance Premiums
This includes spreading out premium increases over a minimum of three years.
By May Vin Ang — 20 Dec 2024, 06:26 PM
Bank Negara Malaysia (BNM) has announced interim measures to address the rising costs of health insurance premiums in Malaysia
In a statement today, 20 December, the central bank said the interim measures are designed to assist policyholders who have experienced premium revisions on their medical and health insurance/takaful (MHIT) products and to ensure their continued coverage.
However, BNM added that broader measures to address the rising medical cost in Malaysia are urgently needed to manage future premium adjustments and ensure that health insurance remains affordable for the Malaysian public.
BNM revealed that the cost of healthcare in Malaysia has grown significantly over the years, with medical cost inflation reaching 15% in 2024 — well above the global average of 10%
It said this rise is driven by factors such as advancements in medical technology and the increasing prevalence of non-communicable diseases, both of which have led to greater demand for healthcare services.
As a result, the claims paid out by insurers and takaful operators (ITOs) have increased faster than the premiums collected, which is unsustainable. Hence, periodic adjustments to MHIT premiums are necessary to ensure that policyholders' claims can continue to be met.
"This is a complex challenge that requires the concerted action of all stakeholders across the healthcare ecosystem," said BNM Governor Dato' Seri Abdul Rasheed Ghaffour.
He added that BNM is working closely with relevant stakeholders, including the Finance Ministry, the Health Ministry, private hospitals, and ITOs to develop a long-term sustainable solution.
In the meantime, to ease financial pressures on policyholders, BNM has announced the following interim measures:
- ITOs have to spread out premium increases over a minimum of three years, until the end of 2026, for all policyholders affected by the repricing. With this measure, at least 80% of policyholders are expected to experience premium adjustments of less than 10% a year.
- Policyholders who have surrendered or whose MHIT policies have lapsed in 2024 due to the recent repricing can reach out to their ITOs to request for a reinstatement of their policies based on the adjusted premium under this measure without additional underwriting requirements.
- All ITOs must provide alternative MHIT products at the same or lower premiums for policyholders who do not wish to continue their existing MHIT plans that have been repriced without additional underwriting or switching costs.
BNM announced that the government, in collaboration with ITOs and private hospitals, has also committed RM60 million to drive health reforms and more effectively manage medical inflation
BNM said this includes implementing the Diagnosis-Related Group payment model across healthcare institutions, standardising costs of common medical procedures and drugs, and digitalising patients' medical records to enhance transparency and continuity of care.
The government also plans to develop a basic insurance product that covers essential healthcare needs for everyone.
