Medical and Health Insurance/Takaful Business

Medical and health insurance/takaful (MHIT) remains an important component of health financing in Malaysia. Over the years, the MHIT business continues to grow as more consumers demand wider access to quality health services as well as heightened awareness of MHIT cover as a risk mitigation tool to assist them financially in the event of catastrophic health incidences. The MHIT business has grown over the years based on the total premiums and takaful contributions of MHIT policies/takaful certificates underwritten by licensed insurers and takaful operators (licensed ITOs).

A number of significant developments are impacting the MHIT business, such as the rise in non-communicable diseases, growth of private healthcare services and escalating medical inflation. These have contributed towards an increase in the utilisation of medical services and magnitude of claims over the years.

There has also been increased expectations for licensed ITOs carrying on MHIT business to provide more comprehensive and inclusive coverage, as well as to account for the latest development in medical technologies and to support preventive care. These developments have placed increased focus on licensed ITOs to continuously innovate to meet consumers’ evolving needs while balancing the need to ensure that the MHIT business remains sustainable in the long term.

The healthcare ecosystem in Malaysia involves many stakeholders including licensed ITOs, healthcare providers, regulators including Bank Negara Malaysia (BNM), managed care organisations and end consumers. Against the backdrop, viable solutions to meet the healthcare financing needs require a concerted and collaborative effort by all stakeholders.

This policy document sets out the regulatory requirements covering the following areas:
(a) Underwriting and terms governing issuance of MHIT policies/takaful certificates;
(b) Product design, including limitations that apply;
(c) Re-pricing and risk pooling practices;
(d) Commissions and incentives;
(e) Monitoring and reporting requirements for MHIT-related data; and
(f) Business conduct and disclosure to consumers.

This document belongs to Bank Negara Malaysia (BNM). Full access to the original source is available here: https://www.bnm.gov.my/banking-islamic-banking