The interim measures included the following:

A. Interim measures to provide continued access to suitable MHIT products

1. Insurers 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%.
2. For policyholders aged 60 years old and above who are covered under the minimum plan within the MHIT product that they purchased, insurers will temporarily pause premium adjustments due to medical claims inflation for one year from their policy anniversary.
3. 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 insurers.

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 insurers.

3. Policyholders who have surrendered or whose MHIT policies have lapsed in 2024 due to the repricing can reach out to their insurers to request for a reinstatement of their policies based on the adjusted premium under this measure without additional underwriting requirements.
4. All insurers 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. Insurers 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. Communications on these measures by insurers to individual policyholders is taking place progressively. Policyholders can also contact their respective insurers from 15 January 2025.

B. Joint contribution to accelerate health reforms and to help policyholders aged 60 years old and above

The Government of Malaysia, together with insurers 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.

The industry collectively also proposed key recommendations, aimed at promoting affordability, transparency and sustainability within Malaysia’s healthcare and insurance as well as takaful ecosystem on 7 March 2025. Among the key proposals were:

1. Implementation of DRG (diagnostic-related grouping) pricing to enhance transparency in healthcare services chargers and billings. Aligning cost structures between healthcare providers, ITOs and Third-Party Administrators (TPAs) is essential in managing healthcare expenses effectively.
2. Working with BNM to develop a basic long term sustainable insurance and takaful product while allowing ITOs to offer top up schemes for those seeking additional coverage.
3. Greater transparency by publishing the average costs of common procedures/treatment across private hospitals and annual medical costs inflation rates to empower consumers with greater financial awareness. The establishment of an industrywide claims database will improve claims analysis and help mitigate abuse.
4. Co-Payment for MHIT products, a key long-term solution which helps policyholders /certificateholders manage costs by encouraging shared responsibility in healthcare expenses. Co-Payment, especially co-insurance, can encourage more responsible consumptions of health services.
5. Regulating Pharmaceutical Costs – Collaborating with the Ministry of Health (MOH) to promote the use of generic drugs and regulate medication pricing. Reports indicate that pharmaceuticals account for a substantial portion of private hospital revenue, indicating the need for cost controls.
6. Calling for private hospitals to set up cost containment unit and to freeze increases during periods when insurers and takaful operators are required to cap premium hikes. This measure aims to ensure that cost containment efforts are equally distributed across the healthcare ecosystem.
7. Tax Exemption on Group Insurance from 8% SST to encourage more employers to provide insurance and takaful protection for employees. Currently approximately 4 million employees including those from the B40 group, receive coverage through workplace schemes.
8. Appoint an independent consultant to conduct a detailed study to analyze and recommend stakeholder actions to reduce claims inflation. This comprehensive study will provide data-driven insights and recommend effective stakeholder actions to control rising claims costs.
9. Encourage and incentivise healthier lifestyles through no claim bonuses, a reward system that benefits those who maintain good health, helps promote well-being and strengthens policyholder engagement and loyalty. This initiative will also reduce unnecessary medical claims.

The insurance and takaful industry strongly advocates for a “whole-of-nation” approach to tackling the rising costs of medical care. This includes greater pricing transparency, the implementation of DRG initiatives, and a commitment from all stakeholders – including healthcare providers, regulators, and insurers to adopt sustainable cost-containment measures.