Takaful Sector Faces RM800Mil In Losses After BNM Caps Medical Insurance Premiums | WeirdKaya

With the cost of healthcare steadily rising in Malaysia, more people are beginning to feel the pinch, not just patients, but also those providing medical insurance and takaful coverage.

As insurance premiums climb alongside medical inflation, striking a balance between affordability and sustainability has become a growing concern.

In response to this, Bank Negara Malaysia (BNM) recently introduced a temporary measure aimed at easing the financial burden on policyholders.

However, while it may bring short-term relief to consumers, it could spell trouble for industry players with the Malaysian Takaful Association (MTA) warning of potential losses of up to RM800 million for the takaful sector.

What does the measure involve?

According to Harian Metro, BNM’s directive limits the annual premium increase for Medical and Health Insurance/Takaful (MHIT) products to below 10% for at least 80% of policyholders, and will be in effect for the next three years.

Although the move is designed to shield consumers from sudden price hikes, it also places significant financial pressure on providers.

Addressing the issue, MTA Chief Executive Officer Mohd Radzuan Mohamed said that while the intention is commendable, the execution may come at a cost.

Why premiums are going up in the first place

To better understand the dilemma, it’s important to look at what’s driving the surge in costs.

Malaysia currently ranks as the third-highest in Asia for medical inflation, making healthcare significantly more expensive year after year.

This, in turn, pushes insurers and takaful operators to raise premiums to remain financially viable, something the new cap could now hinder.

The broader impact across the insurance industry

And it’s not just the takaful sector sounding the alarm.

The Life Insurance Association of Malaysia (LIAM) has estimated that the insurance industry as a whole could suffer losses of up to RM4.5 billion in uncollected premiums due to the limitations set by BNM.

Despite this challenging outlook, industry leaders believe there may be a silver lining.

According to Mohd Radzuan, the policy could serve as a wake-up call for the industry to explore more innovative and cost-effective healthcare solutions that benefit both providers and consumers in the long term.

In the end, while BNM’s move may disrupt the industry in the short term, it could also set the stage for a more affordable, inclusive, and sustainable future in medical protection.

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