Medical insurance premium increases: why Malaysian premiums rose and what BNM did
Medical card premiums have been repriced sharply in recent years. Here is what drove the increases and the interim measures insurers, takaful operators and the government put in place.
Renewal notices for medical cards and medical takaful have carried larger increases than many Malaysians expected in recent years, prompting an industry-wide response coordinated with the government. If your premium jumped noticeably at your last renewal, you are not alone, and there is now a published set of interim measures that affects what happens next.
Why premiums have been rising
Medical and health insurance and takaful (MHIT) premiums are priced to cover the medical claims insurers expect to pay, and those claims costs have been climbing faster than general inflation. The Life Insurance Association of Malaysia has run a long-running consumer education effort on exactly this question, under the banner "Why do my premiums/contributions keep on increasing?", pointing to medical claims inflation as a direct driver of repricing, alongside broader industry work: the industry's Medical Cost Containment Task Force conducted a formal study on the drivers of medical costs and medical insurance premium inflation, examining what is pushing claims costs up over time.
Separately, when the Ministry of Finance was asked in Parliament about the illnesses driving the most claims, it named pneumonia, spine-related issues, digestive problems, heart disease, joint and ligament injuries, acute appendicitis, viral infections and influenza, other respiratory conditions, ENT-related diseases, and fever as the top ten most-claimed conditions. The ministry also noted a lack of transparency in treatment costs between hospitals as a factor complicating the picture, and confirmed that a national health insurance scheme was not being pursued at that time, though the idea could be studied further in future.
The interim measures that followed
In December 2024, the industry introduced a package of interim measures to keep MHIT products accessible while the underlying cost issues are worked through. The core elements, as published by the General Insurance Association of Malaysia (PIAM), are:
- Premium increases spread over time. Insurers agreed to spread out premium changes over a minimum of three years for policyholders affected by repricing, a measure intended to stay in place until the end of 2026. Under this arrangement, at least 80% of policyholders are expected to see yearly increases from medical claims inflation of less than 10%.
- A pause for older policyholders on minimum plans. Policyholders aged 60 and above who hold the minimum plan within their MHIT product get a temporary, one-year pause on premium adjustments linked to medical claims inflation, counted from their policy anniversary. This pause does not cover increases that happen simply because a policyholder moves into a higher age band, which insurers manage separately.
- Reinstatement without fresh underwriting. Policyholders whose MHIT policy lapsed or was surrendered in 2024 because of repricing can ask their insurer to reinstate it at the adjusted premium under these measures, without additional underwriting.
- Alternative products at the same or lower premium. Insurers are expected to offer suitable alternative MHIT products for policyholders who no longer want to continue their repriced plan, at the same or a lower premium, without extra underwriting or switching costs. Insurers that did not already have such alternatives were expected to make them available by the end of 2025.
Policyholders affected by these changes can raise questions directly with their insurer, and PIAM's published guidance points to further communication being rolled out progressively by individual insurers.
The longer-term reforms behind the interim fix
Alongside the interim measures, the government, insurers and private hospitals agreed to jointly contribute RM60 million to accelerate broader health system reforms, particularly aimed at policyholders aged 60 and above. That funding is intended to help implement a Diagnosis-Related Group (DRG) payment model, publish the costs of common medical procedures for greater transparency, and support development of a base MHIT product covering essential healthcare needs that older policyholders could switch into once it becomes available.
The industry also put forward wider recommendations for affordability, transparency and sustainability. These included DRG pricing to align cost structures between hospitals, insurers and third-party administrators; working with Bank Negara Malaysia on a basic, long-term sustainable insurance and takaful product while allowing top-up cover for those who want more; publishing average procedure costs and annual medical cost inflation rates; building an industry-wide claims database; introducing co-payment structures to encourage more considered use of healthcare services; working with the Ministry of Health to promote generic medicines and manage medication pricing; asking private hospitals to freeze increases during capped premium periods; and exempting group insurance from the 8% service tax, a benefit already reaching around four million employees, including many from the B40 income group, through workplace schemes.
What this means if your premium has just gone up
If your MHIT renewal notice shows a larger increase than before, the interim measures give you a few concrete options to check with your insurer: ask whether the increase is being spread under the three-year measure rather than applied in one step, confirm whether you or a family member aged 60 or above on a minimum plan qualifies for the one-year pause, and ask whether an alternative product at a lower premium is now available if the repriced plan no longer fits your budget. If your policy lapsed in 2024 specifically because of a repricing-related non-payment, ask about reinstatement before assuming you have to start a new application from scratch.
Talk to an advisor
Repricing rules differ by insurer and by plan, and the right response, absorbing the increase, switching to an alternative product, or adjusting your deductible, depends on your specific policy. A licensed advisor can go through your renewal notice with you and check what options actually apply. Compare medical plans on our medical insurance comparison, check your overall coverage with the gap check, or find an advisor through the advisor directory.
Sources
This content is educational information from a licensed advisor, not financial advice. Product details vary by insurer — verify specifics with an advisor.
