Hello, readers! Big news just dropped from Bank Negara Malaysia (BNM) today regarding the much-debated repricing of Medical and Health Insurance (MHI) and Takaful plans.
If you’re worried about rising medical insurance premiums, don’t fret — BNM has announced some interim measures to address public concerns. Let’s dive into what these measures mean for you.
The cost of healthcare in Malaysia has grown significantly over the years, with medical cost inflation reaching 15% in 2024 – well above the global and Asia Pacific average of 10%.
This rise is driven by factors such as advancements in medical technology and the increasing prevalence of non-communicable diseases, which have led to greater demand for healthcare services. As a result, the claims paid out by insurers and takaful operators (ITOs) have grown faster than the premiums collected.
While ITOs maintain reserves to cover unexpected increases in medical claims paid, this cannot be sustained if the cost of claims continues to increase beyond reasonable estimates. Hence, periodic adjustments to MHIT premiums are necessary to ensure that policyholders’ claims can continue to be met.
A. Interim measures to provide continued access to suitable MHIT products
- To help manage the impact of MHIT premium adjustments, ITOs will spread out the changes in premiums over a minimum of three years for all policyholders affected by the repricing. This measure will remain in place until the end of 2026. With this measure, at least 80% of policyholders are expected to experience yearly premium adjustments due to medical claims inflation of less than 10%.
- For policyholders aged 60 years old and above who are covered under the minimum plan within the MHIT product that they purchased, ITOs will temporarily pause premium adjustments due to medical claims inflation for one year from their policy anniversary.(The interim measures above are not applicable to premium increases that may apply when a policyholder moves to a higher age band. This will be managed separately by the ITOs.)
- Policyholders who have surrendered or whose MHIT policies have lapsed in 2024 due to the 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 will provide appropriate 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.ITOs that do not currently offer appropriate alternative products must make these products available to policyholders by the end of 2025.Switching to the alternative MHIT products will not require any additional underwriting or involve any switching cost. This, together with other reforms to contain medical cost inflation, will serve to avoid significant future premium adjustments.
B. Joint contribution to accelerate health reforms and to help policyholders aged 60 years old and above
The Government, together with ITOs and private hospitals, will contribute RM60 million to accelerate health reforms. This includes the implementation of Diagnosis-Related Group payment model and publication of costs of common medical procedures for greater transparency.
In addition, part of the fund will also be used to facilitate the development of a base MHIT product that covers essential healthcare needs and facilitate policyholders aged 60 years old and above to switch to the new base product, once available.
For future updates, please visit bnm.gov.my/mhit
Bank Negara Malaysia
20 December 2024
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