KUALA LUMPUR: Rising health insurance premiums in Malaysia are driven by more than just increasing treatment costs. Higher healthcare utilisation, more complex procedures and new medical technologies are all contributing to the pressure on premiums, the Life Insurance Association of Malaysia (LIAM) said.
LIAM chief executive officer Mark O’Dell said the insurance industry needed to continue working with hospitals, doctors, the government and other stakeholders to address rising healthcare costs and utilisation. He said such efforts were important to prevent rising treatment costs from placing further pressure on policyholders’ ability to afford medical coverage, NST reported.
The distinction between medical claims inflation and medical cost inflation is critical, O’Dell said. Data from the Malaysia Medical Claims Inflation Report 2025 showed medical claims inflation reached 12.28 per cent in 2025, but 11.22 percentage points of that increase were driven by a higher number of claims, with only the balance attributable to the rising cost of care.
“Medical claims inflation and medical cost inflation are not the same thing. The latest data showed that increased utilisation is a significant contributor to the growth in medical claims,” O’Dell told BernamaBiz.
The insurance and takaful industry paid RM13.5 billion in medical claims in 2025, up from RM12.2 billion in 2024, a 10.7 per cent rise. The increase reflects growing demand for healthcare among Malaysians covered by medical insurance and takaful.
O’Dell said key factors contributing to rising healthcare costs and premiums included increased utilisation of medical treatment, more complex and expensive treatments, technological advancements and the introduction of new medicines. Other factors include rising healthcare service costs, an increase in non-communicable diseases, fraud, waste and abuse.
Cost variations across healthcare settings painted a mixed picture. Claims involving public and teaching hospitals, which accounted for about 9 per cent of total claims, recorded a 14 per cent decline in cost. Private hospital costs rose by about 5.9 per cent, while private day-care facilities saw a 2.3 per cent increase.
Medical claims account for around 75 to 80 per cent of insurance premiums and takaful contributions. O’Dell said the implications of continued claims growth extended beyond insurers and takaful operators. Prolonged growth in claims at a pace faster than the underlying financing pool would increase pressure on affordability and sustainability of medical protection.
The increase in utilisation should not be viewed solely as a negative trend, O’Dell said. It can also reflect positive developments such as a rise in health awareness, earlier detection of illnesses, improved access to treatment and Malaysians seeking treatment sooner.
“The objective is not to discourage healthcare utilisation, but to ensure that healthcare resources are used appropriately, and that patients receive the right care, in the right setting, at a sustainable cost,” he said.
Insurers offered various options to help policyholders, including plans with different levels of coverage and costs, as well as co-payment or deductible options that could be adjusted according to affordability. O’Dell encouraged policyholders to discuss with their insurers or agents to find options that suit their needs.
It was previously reported that many medical card holders had been forced to stop paying premiums following monthly premium increases, while others opted for cheaper plans with more limited coverage for illnesses and treatments.
The industry expects medical claims growth to remain elevated in the near term due to continued utilisation and service intensity. The precise level of claims inflation remains uncertain, making longer-term reforms increasingly important.
“The industry is working closely with various stakeholders under the Reforming the Medical and Health Insurance/Takaful Ecosystem (RESET) agenda to achieve the same objective: better health outcomes, greater transparency, more efficient use of resources and sustainable healthcare financing,” O’Dell said.
