Base Medical Insurance Design to Be Finalised by Year-End

📰 BNM: Base Medical, Health Insurance/Takaful Product Design to Be Finalised by Year-End

KUALA LUMPUR — Bank Negara Malaysia (BNM) said the base medical and health insurance/takaful product framework will be finalised by the end of 2025, marking a significant step towards enhancing access to affordable and sustainable health protection for Malaysians.

The move forms part of the central bank’s broader agenda to strengthen financial inclusion and reduce medical underinsurance, particularly among low- and middle-income groups.

“The development of a base medical and health insurance/takaful product is aimed at ensuring essential protection coverage that is accessible, transparent, and sustainable,” said BNM Governor Datuk Abdul Rasheed Ghaffour in a policy briefing on Friday.

Towards Standardised and Affordable Coverage

The proposed framework, currently in its consultation stage, seeks to standardise the minimum coverage features, pricing parameters, and disclosure requirements of entry-level medical and health products offered by insurers and takaful operators.

According to BNM, the initiative will help address cost escalation and coverage gaps across the industry — ensuring that policyholders are not exposed to “hidden exclusions” or excessive premium adjustments.

“Affordability and transparency remain our top priorities,” BNM said.
“We aim to establish a baseline product that delivers essential coverage while allowing insurers flexibility to offer add-on options.”

The product will be digitally enabled, allowing consumers to compare coverage terms, prices, and claims processes across different providers through online financial comparison platforms and BNM’s Financial Education Network (FEN) portals.

Supporting National Health Protection Goals

The initiative aligns with Malaysia’s National Health White Paper and supports the government’s goal of building a resilient health financing ecosystem through a combination of public and private risk pooling mechanisms.

Industry experts believe the standardised product will serve as a gateway for uninsured individuals to participate in health protection schemes — complementing public healthcare while easing fiscal pressure on government-funded hospitals.

“A harmonised entry-level insurance/takaful product can help narrow Malaysia’s protection gap,” said Xavier Lee, Chief Market Strategist at the International Financial Consultant Certified Institute (IFCCI).
“It represents a necessary step in balancing affordability, coverage quality, and long-term sustainability of medical financing.”

Collaboration with Insurers and Takaful Operators

BNM is currently working with key industry stakeholders — including the Life Insurance Association of Malaysia (LIAM), Malaysian Takaful Association (MTA), and General Insurance Association of Malaysia (PIAM) — to finalise the design and operational standards.

Pilot testing is expected to begin in early 2026, focusing on digital distribution models, data-driven underwriting, and transparent claims tracking to improve consumer trust.

Once implemented, the base product will serve as a reference benchmark for insurers and takaful operators, setting the foundation for risk-based pricing reforms and greater product comparability across the industry.

IFCCI Insight: Strengthening Financial Resilience Through Inclusive Insurance

According to IFCCI’s 2025 Q4 Policy Brief, Malaysia’s insurance and takaful penetration rate — currently around 60% of GDP, below the regional average — underscores the need for structural reforms in protection accessibility.

“BNM’s standardised base product framework will help bridge the trust deficit between insurers and consumers,” said Dr. Elaine Wong, Head of IFCCI Research.
“It could also catalyse innovation in micro-insurance and digital takaful solutions, making protection truly inclusive.”

IFCCI expects this initiative to complement Malaysia’s Financial Sector Blueprint 2022–2026, which emphasises digitalisation, risk pooling, and financial literacy as critical pillars for long-term economic resilience.

Outlook: Policy Completion by End-2025

The final framework — to be completed by year-end — will outline:

• Minimum coverage scope for hospitalisation, surgery, and outpatient treatment;
• Standardised product wordings to improve transparency;
• Premium ceilings and review mechanisms to control cost escalation;
• Disclosure and comparability standards for online sales channels;
• Claims transparency and dispute resolution protocols under BNM’s oversight.

BNM said the completed design will be publicly released following stakeholder consultations and pilot testing feedback.