KUALA LUMPUR (Dec 21): Bank Negara Malaysia (BNM) announced on Friday evening several temporary measures to address the uproar over the sizeable medical insurance premium hikes that insurance and takaful operators deem necessary to cover the higher costs of medical services.

The central bank introduced interim measures to alleviate the immediate financial impact on policyholders and preserve medical and health insurance/takaful (MHIT) coverage.

However, broader measures to address the rising medical cost in Malaysia are urgently needed to manage future premium adjustments and ensure that MHIT products continue to be affordable for the public, BNM said in a statement.

Medical inflation in Malaysia reached 15% in 2022, well above the global and Asia-Pacific average of 10%, driven by several factors, including advancements in medical technology and increasing prevalence of non-communicable diseases, which led to greater demand for healthcare services. As a result, the claims paid out by insurers and takaful operators (ITOs) have grown faster than the premiums collected.

“While ITOs maintain reserves to cover unexpected increases in medical claims paid, this cannot be sustained if the cost of claims continues to increase beyond reasonable estimates. Hence, periodic adjustments to MHIT premiums are necessary to ensure that policyholders’ claims can continue to be met,” BNM’s statement read.

Yet, should consumers bear the brunt of runaway medical inflation?

To read why all Malaysians should pay attention to developments on this front and what analysts think would be the impact of potential regulatory changes on healthcare stocks, pick up a copy of the Dec 23, 2024 issue of The Edge Malaysia weekly available at the newsstands from Saturday, Dec 21.

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