Higher healthcare use drives Malaysia’s 12.28pc medical claims inflation

KUALA LUMPUR, Aug 27 — Medical claims inflation in Malaysia rose 12.28 per cent in 2025, with increased healthcare utilisation accounting for most of the increase, according to an industry report released today.

The Malaysia Medical Claims Inflation Report 2025 found that 11.22 percentage points of the increase came from a rise in the number of claims, while the remainder was attributed to higher healthcare costs.

The insurance and takaful industry paid RM13.5 billion in claims in 2025, up about 10.7 per cent from RM12.2 billion the previous year, the report said.

“Medical claims inflation remained high at 12.28 per cent in 2025. Importantly, 11.22 percentage points came from the increase in the number of claims. This shows that utilisation, and not just medical prices, is a major driver of rising claims costs,” said Life Insurance Association of Malaysia (LIAM) chief executive officer Mark O’Dell.

“The findings are consistent with the World Bank’s analysis of Malaysia’s Medical and Health Insurance/Takaful (MHIT) sector, which identified healthcare utilisation and service intensity as key contributors to rising medical claims costs. It reinforces the need to address the issue holistically,” he said.

The report said the overall rise in the cost of care was partly moderated by public hospital claims, which accounted for 9 per cent of all claims and recorded a 14 per cent decrease in claims costs from the previous year.

In comparison, the cost of care in private hospitals increased 5.89 per cent, while claims costs in private day-care settings rose 2.3 per cent, it said.

Healthcare utilisation refers to factors including the number of people seeking treatment, frequency of treatment, types of procedures and intensity of care, with the report citing an ageing population and rising non-communicable diseases as factors contributing to increased use of healthcare services.

The report also showed a shift in treatment patterns, with inpatient claims falling slightly from about 808,200 in 2024 to 803,400 in 2025, while day-care claims increased from 314,500 to 354,100.

Heart disease, disc disorders, infectious gastroenteritis and colitis, pneumonia and bronchitis were among the leading inpatient diagnoses, while cataract, breast cancer, gastritis, lung cancer and other eye disorders topped day-care claims.

The report said claims typically account for about 75 to 80 per cent of medical insurance premiums and takaful contributions, meaning rising claims costs put pressure on the adequacy of premiums and contributions.

Malaysian Takaful Association chief executive officer Mohd Radzuan Mohamed said average annual medical claims inflation stood at 13.63 per cent between 2023 and 2025, compared with about 8 per cent between 2013 and 2018.

The industry said measures including deductibles and co-insurance or co-takaful, the government’s RESET initiative, MediAsas and Diagnosis Related Group-based billing could help contain claims growth, alongside greater healthcare cost transparency and stronger use of claims data to identify fraud, waste and abuse.

The report said double-digit claims growth was expected to continue in the near term, although the level of medical claims inflation for 2026 could not be predicted precisely.