A forecast that Malaysia’s healthcare sector will expand about 12% towards 2030 points to sustained demand for medical services. For insurers and takaful operators, that demand carries a cost. The rising utilisation behind the growth is driving medical claims inflation that has outpaced premium income and triggered a regulator-managed repricing exercise running through the end of 2026. The growth forecast was presented by consulting firm Frost & Sullivan at the 21st Bursa Malaysia-Hong Leong Investment Bank Stratum Focus Series, as reported by The Sun and the New Straits Times. Frost & Sullivan head of healthcare and life sciences (advisory, APAC) Rathanesh Ramasundram attributed the outlook to an ageing population, non-communicable diseases (NCDs), private sector expansion, medical tourism, and digital health, The Sun reported.
The New Straits Times reported that medical and health insurance takaful claims reached RM6.75 billion in 2023, a six-fold increase since 2003. Bank Negara Malaysia’s (BNM) Annual Report 2024 quantified the imbalance: total MHIT claims rose 73% between 2021 and 2023, against 21% growth in premiums collected over the same period. The regulator attributed the gap to higher treatment costs and to more frequent use of services, noting that claims frequency rose from 11 per 100 policyholders in 2018 to 25 per 100 by 2023.
Malaysia’s medical cost inflation reached 15% in 2024 on Bank Negara Malaysia’s measure, above the global and Asia-Pacific average of about 10%, according to Generali Malaysia. WTW, which surveys insurers on gross medical trend, put Malaysia’s figure at 11.7% for 2024, rising to 13.9% in 2025 and a projected 15.7% for 2026, with Asia-Pacific recording the highest regional trend globally at 14%, according to its 2026 Global Medical Trends report. WTW identified new medical technologies, cited by 77% of insurers, pharmaceuticals at 63%, and limited cost sharing at 51% as the main drivers, with cancer the leading condition. “Rising medical costs are a consistent trend for all,” WTW’s Eva Liu said.
Under Bank Negara Malaysia’s interim measures, insurers and takaful operators must stagger repriced premiums over a minimum of three years, with the measures in place through the end of 2026 and at least 80% of affected policyholders expected to see annual increases below 10%, alongside a one-year pause for those aged 60 and above on minimum plans. Policyholders who lapsed or surrendered cover in 2024 may reinstate without additional underwriting, and operators must offer alternative products at the same or lower premiums by the end of 2025, industry body Persatuan Insurans Am Malaysia (PIAM) said.
BNM governor Abdul Rasheed Ghaffour told Parliament’s Public Accounts Committee (PAC) that safeguarding operators’ financial sustainability is central to how the bank regulates premium adjustments, describing MHIT products as “becoming increasingly unsustainable due to inflation and rising medical costs.” Bank Negara’s Financial Stability Review for the second half of 2024 noted that spreading adjustments over three years is expected to weigh on the net underwriting income of life insurers and family takaful operators.
The cost pressure is reshaping product design. Co-payment and co-insurance features are a required option under BNM’s MHIT framework, and WTW identified limited cost sharing as a leading driver of inflation, recommending co-payment and co-insurance designs to encourage more measured use. Longer-term containment centres on a Diagnosis-Related Group (DRG)payment model, which shifts hospital reimbursement from fee-for-service towards fixed payments per case, together with publication of common procedure costs; the government, insurers, and private hospitals committed RM60 million towards those reforms, PIAM said. Digital delivery is a further lever, with the New Straits Times reporting the digital health market was valued at US$534 million in 2024 and projected to grow at a compound annual rate of 9.89% through 2032, led by telemedicine and smart hospitals.
A standardised base MHIT plan, offered on a voluntary basis, is scheduled for pilot implementation in the second half of 2026 and full rollout in early 2027, timed to the expiry of the interim measures, the Ministry of Finance said. Policyholders facing repricing will have the option to switch to the base plan with their current insurer without new underwriting.
The pressure is unlikely to ease on the demand side. The Sun reported that Malaysia is expected to become an ageing nation by 2030, when about 15% of the population will be aged 60 and above, rising to nearly one in four by 2050, and that NCDs impose an annual economic burden of about RM64.2 billion, equivalent to 4.2% of gross domestic product. Those trends point to sustained growth in the frequency and severity of claims, the dynamics that underpin the repricing exercise.
