Malaysia: Insurance Industry Submits Recommendations to Address Rising Healthcare Costs
By Anoop Khanna | March 10, 2025
The Life Insurance Association of Malaysia (LIAM), the Malaysian Takaful Association (MTA), and Persatuan Insurans Am Malaysia (PIAM) have engaged with Malaysia’s parliamentary Public Accounts Committee (PAC) to find solutions to the escalating costs of healthcare and health insurance premiums. The industry’s recommendations aim to promote affordability, transparency, and sustainability within the country’s healthcare and insurance ecosystem.
LIAM stated that the meeting on February 26, 2025, included constructive discussions on sustainable healthcare financing and cost-containment strategies. The organization’s press release noted, “The industry recognizes the efforts by the PAC to address escalating medical inflation and rising healthcare costs in the country and is looking forward to the ‘whole-of-nation’ approach within the next few years.”
The insurance and takaful industry has already taken interim measures to support policyholders impacted by premium increases. These steps provide some immediate relief while preserving access to medical and health insurance and takaful (MHIT). Specifically they include:
- Spreading premium increases over three years (until 2026).
- Capping annual increases below 10% for the majority of policyholders/certificate holders (approximately 80%).
- Temporarily freezing premiums for one year for those aged 60 and above with minimum MHIT plans.
- Allowing policyholders whose plans lapsed in 2024 due to repricing to reinstate coverage without requiring new underwriting.
- Introducing more affordable MHIT products in 2025.
Beyond these short-term measures, the industry proposed several major recommendations, including:
- DRG (diagnostic-related grouping) pricing implementation: This will increase transparency in healthcare service costs and billing.
- Cost structure alignment: Bringing cost structures of all healthcare providers, ITOs, and TPAs into alignment to effectively manage healthcare expenses.
- Collaboration with Bank Negara Malaysia: This will help develop a basic long-term sustainable insurance and takaful product and allow ITOs to provide top-up coverage.
- Increased transparency on costs: Publishing the average costs of common procedures and annual medical cost inflation rates to give consumers better financial awareness.
- Industrywide claims database: This would help to improve claims analysis and reduce abuse.
- Co-payment for MHIT products: This is a long-term solution to help policyholders share responsibility for expenses.
- Regulation of pharmaceutical costs: Working with the Ministry of Health (MOH) on generic drug use and medication pricing.
- Cost containment units: The industry is also calling on private hospitals to set up cost containment units and to freeze increases during periods when insurers and takaful operators are required to cap premium hikes.
- Tax exemption: on group insurance to encourage more companies to offer employees insurance and takaful protection.
- Independent study: Hiring an independent consultant to conduct a detailed study providing data-driven insights on how to reduce claims inflation.
- Incentives for healthy lifestyles: Encouraging no-claim bonuses and other rewards to promote healthier habits and reduce medical claims.
LIAM’s statement emphasized its commitment to these collaborative efforts: “LIAM, MTA and PIAM remain committed to working closely with Bank Negara Malaysia, the MOH, Association of Private Hospitals Malaysia and other stakeholders to develop long-term solutions that balance affordability, quality and accessibility in the Malaysian healthcare landscape.”
