Malaysia’s insurance and takaful industry namely Life Insurance Association of Malaysia (LIAM), Malaysian Takaful Association (MTA), and Persatuan Insurans Am Malaysia (PIAM) are addressing the rising healthcare and insurance costs with key proposals after discussions with the Public Accounts Committee (PAC).
As part of their commitment, the industry has implemented interim measures to support policyholders affected by premium repricing. These measures aim to alleviate financial burdens while ensuring continued access to medical & health insurance and takaful (MHIT).
To ease financial burdens:
- Premium increases will be phased over 3 years until 2026, with most hikes kept below 10% per year
- Seniors aged 60+ with basic plans will get a one-year premium freeze
- Lapsed policies from 2024 can be reinstated without new underwriting.
- More affordable medical insurance and takaful products will be introduced by 2025.
Key recommendations include:
- Introducing Diagnostic-Related Grouping (DRG) pricing for transparent medical billing
- Developing a sustainable insurance product with Bank Negara Malaysia
- Publishing average treatment costs to improve transparency. An industry-wide claims database will help detect fraud.
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A key long-term solution proposed by the industry is the introduction of a co-payment system for MHIT products to encourage responsible healthcare spending, along with regulating pharmaceutical costs through the Ministry of Health. Private hospitals are urged to contain costs and freeze price hikes when premium caps are enforced.
Additionally, the industry is advocating for a tax exemption on group insurance from the 8% Sales and Services Tax (SST) to incentivise more employers to provide insurance and takaful protection for employees. Currently, approximately four million workers, including those from the B40 income group, receive coverage through workplace schemes.
Another proposal is the appointment of an independent consultant to conduct a comprehensive study on claims inflation. The findings will provide data-driven insights and recommend targeted actions to curb rising claims costs.
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Encouraging and incentivising healthier lifestyles is also a focus, with the industry proposing no-claim bonuses as a reward for policyholders who maintain good health. This initiative aims to promote overall well-being, strengthen policyholder engagement, and reduce unnecessary medical claims.
(Source: Life Insurance Association of Malaysia)