BNM: Insurers to spread out change in premiums over minimum of 3 years

Bank Negara Malaysia (BNM) has announced interim measures to help manage the impact of medical and health insurance and takaful (MHIT) premium adjustments.

It said insurers and takaful operators (ITOs) will spread out the changes in premiums over a minimum of three years for all policyholders affected by the repricing, and this measure will remain in place until the end of 2026.

“With this measure, at least 80 percent of policyholders are expected to experience yearly premium adjustments, due to medical claims inflation, of less than 10 percent,” it added.

BNM governor Abdul Rasheed Ghaffour said these interim measures will provide some temporary support to policyholders, but broader health reforms must be expedited with a commitment to achieve clear outcomes in the coming years.

“We need to address the root causes of rising medical and health insurance and takaful premiums which are driven by higher medical costs and utilisation of medical services. The design of MHIT products must also be improved to make them more sustainable and aligned with value-based healthcare that prioritises better health outcomes,” he said in a statement today.

He said the central bank is working closely with the relevant stakeholders including the Finance Ministry, Health Ministry, private hospitals and ITOs, with all parties having been supportive and committed to working out a long-term sustainable solution to this complex issue.

BNM said another interim measure is for policyholders aged 60 years old and above who are covered under the minimum premium/contribution plan of the MHIT product that they purchased. The measure will require ITOs to temporarily pause premium adjustments 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,” it added.

Policyholders who have surrendered or whose MHIT policies have lapsed in 2024 due to the repricing can reach out to their ITOs to request a reinstatement of their policies based on the adjusted premium under this measure without additional underwriting requirements.

Also, 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 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,” it said.

BNM said communications on these measures by ITOs to individual policyholders will take place progressively and policyholders can also contact their respective ITOs from Jan 15, 2025.

Health reforms

In another development, BNM said the government, together with ITOs and private hospitals, will contribute RM60 million to accelerate health reforms.

This includes implementing a diagnosis-related group payment model and publishing 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 facilitates policyholders aged 60 years old and above to switch to the new base product, once available,” it said.

Moreover, the central bank said that BNM and its stakeholders, including the Health Ministry, private hospitals, and ITOs, are committed to strengthening their collaborative efforts to contain medical cost inflation effectively.

It said these efforts include cost containment measures such as greater transparency in drug prices, advancement of digitalisation efforts to enable the sharing of electronic medical records that would reduce the need for repeated tests, and strategic purchasing by both public and private sectors to reduce cost.

“Progress on these measures will be monitored to ensure the intended outcomes of reducing medical cost inflation are achieved.

“This will also be important to transition to more sustainable provision of MHIT products going forward,” it said.

BNM added that the progress would serve as a basis for its periodic review of these interim measures, which would be performed in tandem with the progress of the reforms in the healthcare ecosystem.

- Bernama

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