KUALA LUMPUR: The takaful industry is expected to face potential losses of up to RM800 million following Bank Negara Malaysia’s (BNM) interim measures to curb rising medical and health insurance and takaful contributions.
Malaysian Takaful Association (MTA) CEO Mohd Radzuan Mohamed said the three-year pricing cap, which limits annual contribution increases to below 10% for at least 80% of certificate holders, poses a significant challenge to the sector’s sustainability.
He said that while the intention is to ease the financial burden on consumers, the rising cost of medical treatment remains the root issue.
“We understand public concern over rising contributions, but the core problem lies in the escalating cost of healthcare services. Contribution adjustments are necessary to absorb these costs,” he said during a media briefing on the takaful industry’s 2024 performance today.
Similarly, the Life Insurance Association of Malaysia has warned that the insurance industry could face losses of up to RM4.5 billion due to uncollected premiums under BNM’s measures.
Malaysia currently ranks third in Asia for medical inflation, which has been a key driver behind increased insurance and takaful costs.
Despite the financial pressure, Mohd Radzuan remained optimistic, saying that the central bank’s policy could prompt the development of more affordable medical protection solutions. “We hope to see more initiatives leading to innovative approaches that make medical protection more accessible to all Malaysians.”
The interim measures, in effect until the end of 2026, aim to balance consumer affordability with the financial sustainability of insurance and takaful providers.
On the projected medical inflation rate of up to 30% this year, Mohd Radzuan said the industry supports BNM’s move to cap contributions while encouraging takaful operators to offer lower-cost alternatives.
He noted that structural healthcare reform is already under way, involving key stakeholders to address pricing, transparency, and access.
“The medical protection issue in Malaysia is complex and interconnected. BNM has acted decisively by introducing clear guidance for the next three years, allowing consumers to plan and manage their budgets more effectively,” Mohd Radzuan said.
He added that the measures include a temporary freeze on price increases for senior citizens, alongside requirements for operators to provide more affordable plan options.
“As takaful operators, we must find a way to balance rising costs while offering accessible protection. MTA is working closely with stakeholders, including BNM, to map out long-term solutions,” Mohd Radzuan said.
Key reform areas identified are encouraging hospitals to publish the actual costs of common procedures and medications, introducing more efficient payment models such as diagnosis-related group systems, and expanding access to affordable medical solutions.
