KUALA LUMPUR, Nov 29 — The insurance industry has expressed its commitment to stagger increases in medical insurance premiums and offer flexible payment plans, amid public backlash towards rising premiums.
In a joint statement yesterday, the Life Insurance Association of Malaysia (LIAM), Malaysian Takaful Association (MTA), and Persatuan Insurans Am Malaysia (PIAM) blamed an “unprecedented” cumulative medical claims cost inflation of 56 per cent from 2021 to 2023.
“This surge, driven by various factors such as the rising costs of medical treatments, advanced health care technologies, and increased utilisation of health care services, has made premium repricing an unavoidable measure,” LIAM, MTA, and PIAM said in their statement.
“Beyond inflation, the repricing quantums are also affected by factors such as individual risk rating, risk pooling, product benefits and features as well as expected claims payout.
“Although insurers and takaful operators have different repricing cycles, they typically review and adjust premiums every three years to ensure the sustainability of medical insurance plans. The accumulated impact of claims inflation has resulted in upward premium adjustments.”
Contrary to the insurance industry’s claim that it would “stagger repricing adjustments”, many people with health insurance have already either been charged higher premiums or received notices on an increase in their premiums.
Crucially, some have already either terminated their medical insurance policies or let them lapse, such as a cancer patient, as cited by Bayan Baru MP Sim Tze Tzin, who did not renew his policy last August due to a 262 per cent hike in his premium.
Despite LIAM, MTA, and PIAM purporting that health insurance premiums are only reviewed every three years, there have been cases of insurers raising premiums every year.
Under her AIA medical plan, CodeBlue editor-in-chief Boo Su-Lyn’s premiums increased consecutively every year from 2022 to 2025. Her 2023 annual premium was revised from her entering a new age bracket.
Boo’s annual premiums increased from RM1,551 in 2023 to RM1,679 this year, rising again to RM2,242 for next year. In just two years, her premiums jumped about 45 per cent from 2023 to 2025. She did not make any changes to her health insurance policy ever since she took it up.
While the insurance industry’s joint statement alleged 56 per cent medical claims cost inflation from 2021 to 2023, AIA’s March 2024 letter to Boo justifying her 2024 premium revision cited 8.7 per cent three-year average medical inflation per annum from 2020 to 2022.
AIA did not send Boo a letter on why her 2025 annual premium increased by 34 per cent (RM563) from 2024; only the RM2,242 premium due amount was stated on her AIA dashboard. Last March, AIA’s letter to Boo stated that all future updates pertaining to her medical plan would be communicated to her with 30 days’ prior written notice.
The joint statement by LIAM, MTA, and PIAM cited several factors driving medical inflation, such as the rising cost of advanced medical equipment and innovative treatments; increased utilisation of health care services (including post-pandemic treatment and elective surgeries); escalating costs in private hospitals; high prevalence of chronic diseases like diabetes and obesity; and higher demand for medical care from an ageing population.
The three insurance/takaful associations described Bank Negara Malaysia’s (BNM) copayment mandate as a “long-term solution”.
Since last September 1, BNM required all insurers/ takaful operators (ITOs) offering medical and health insurance and takaful (MHIT) products to offer at least one product with a minimum 5 per cent copayment and/or an RM500 deductible. Any new medical reimbursement insurance/ takaful product designed must come with the minimum 5 per cent copay.
“Copayment options aim to reduce premiums by sharing medical costs with policyholders, encouraging more mindful health care usage in the long term.”
The insurance industry welcomed the recent announcement by the Association of Private Hospitals Malaysia (APHM) on establishing a cost containment unit to manage health care costs, besides Health Minister Dzulkefly Ahmad’s proposal to change private hospital billing from fee-for-service to value-based health care.
A statement by BNM released yesterday used the same language as the insurance industry that it regulates, describing rising health insurance premiums as “repricing”.
“In addressing the impact on policy owners/takaful participants, BNM has required ITOs to review their current repricing strategies for more reasonable implementation of such repricing,” said the central bank.
“This includes managing increases in premiums/contributions over time, taking into account the impact on policy owners/takaful participants. In addition, ITOs are required to offer viable options for policy owners/takaful participants who are significantly impacted by the higher premiums/contributions to continue having insurance/takaful coverage.
“ITOs must also ensure the options provided are meaningful and provide additional measures to support affected policy owners/takaful participants.”
BNM’s statement yesterday omitted mention of its copayment mandate that it previously touted in July as a way to promote “more sustainable and affordable” health insurance.
“Greater take-up of copayment MHIT products over time aims to help contain medical cost inflation in Malaysia by controlling the over-consumption of health services, alongside other health care reforms envisaged in the Health White Paper published by the government,” the central bank had said then.
Utusan Malaysia recently reported that medical insurance premiums are expected to rise by 40 per cent to 70 per cent next year.
Sim, who is spearheading a campaign against rising health insurance premiums and private hospital billing, posted on X yesterday, following BNM’s statement, that the “rakyat won first battle, the war is not over yet.”
