Bank Negara Malaysia (BNM) is moving ahead with a new standardised base medical and health insurance/takaful (MHIT) plan under its RESET reform agenda, as policymakers seek to ease mounting pressure on private healthcare financing and address widening affordability and coverage gaps. The move comes as Asia-Pacific is expected to post the fastest medical cost growth in the world. According to WTW’s 2026 Global Medical Trends report, the average cost of medical benefits worldwide is projected to rise 10.3% in 2026, following increases of 10% in 2025 and 9.5% in 2024. Asia-Pacific is forecast to lead all regions with a 14% increase in 2026, up from 13.2% in 2025 and 11.8% in 2024. Against that backdrop, BNM is positioning RESET and the base MHIT product as part of its response to medical inflation and persistent concerns over the affordability of private health cover in Malaysia.
BNM deputy governor Aznan Abdul Aziz said ongoing engagement with the Ministry of Health, Ministry of Finance, private hospitals, doctors, insurers, takaful operators and consumer groups has highlighted three recurring themes: premium affordability, long-term sustainability, and the interaction between reforms in health delivery and insurance. “Premium increases, especially for older Malaysians, can make it harder for families to keep their coverage. All parties agree that we need to keep medical costs in check without sacrificing the quality of care,” Aznan said, as reported by The Star. He said efforts focused only on restraining premium increases, without addressing how care is priced and delivered, risk shifting costs among patients, providers and payers without changing the underlying trend. According to Aznan, maintaining current arrangements unchanged is “not an option,” with hospitals, insurers, regulators, and medical professionals all expected to adjust.
RESET is described by BNM as a multi-year program to simplify medical products, increase price transparency, and better align incentives across the healthcare financing chain. The initiative is intended to make private cover easier to understand and more predictable, while supporting its interaction with the public system. “The RESET initiative is a crucial step for Malaysia because it addresses the deeper, long-term challenges in our private health insurance system rather than focusing solely on short-term issues,” Aznan said.
The base MHIT plan is the first standardised product under this framework. It is structured as a pure protection plan rather than an investment-linked offering, with a defined annual benefit limit of RM100,000. According to BNM, the limit is based on local private hospital data and is estimated to cover roughly 99% of typical treatment episodes. To manage utilisation and costs, the product includes co-payments and standardised benefits. It is designed to operate alongside Malaysia’s public healthcare system: public hospitals remain the primary safety net, while MHIT provides optional private treatment coverage for consumers who want a simpler, more predictable product structure.
BNM states that a key objective of the base MHIT plan is to expand access to cover for individuals with stable, controlled pre-existing conditions who currently often face difficulty obtaining any form of medical insurance or takaful. Under the MHIT framework, the regulator is steering the market toward a more transparent and proportionate underwriting approach. This includes condition-specific waiting periods, clearer coverage definitions, and guidance developed with health professionals and insurance and takaful operators. The intention, according to BNM, is to widen access while maintaining overall premium adequacy.
BNM is also considering a “no look-back” provision under which, after a period of continuous coverage, insurers would not deny claims solely on the basis of pre-existing conditions. The proposal is aimed at increasing predictability for policyholders regarding medium- and long-term protection. For older age bands, the base MHIT structure is designed to moderate sharp premium increases later in life. Premiums remain age-based, but BNM indicates that the curve between younger and older cohorts is intended to be flatter than in many existing products. Risk is pooled across all participating insurers and takaful operators, and there are limits on how much an individual’s health status can affect pricing, subject to regulatory oversight.
BNM is also focusing on claims operations, particularly delays and denials, which have drawn attention from policyholders and providers. Together with the Health and Finance ministries, the central bank has reactivated the Healthcare Partners Protocol & Solutions Committee (HPPSC), whose members include the Malaysian Medical Association, the Association of Private Hospitals Malaysia, insurers, takaful operators, third-party administrators, and patient advocates.
The HPPSC concentrates on system-level processes rather than individual disputes. Since its reactivation, the group has worked on clearer claims protocols, steps to streamline the issuance of guarantee letters, and direct communication channels for doctors to clarify treatment-related questions with insurers. It has also developed guidance on the handling of new medical technologies and procedures that are not explicitly referenced in existing policies, which BNM says is intended to reduce uncertainty and potential disputes.
On redress, BNM is tightening communication expectations for insurers and takaful operators from point of sale through to claims. Policyholders are expected to raise claim concerns first with their insurer or takaful operator. Unresolved issues can then be escalated to BNMLINK, BNM’s public enquiry, and complaints channel, while the Financial Markets Ombudsman Service provides independent adjudication at no cost for eligible cases.
Malaysia’s reforms are taking place amid sustained global medical inflation. WTW’s survey of 346 health insurers across 82 countries indicates that more than half of insurers expecting higher cost trends believe elevated levels will persist for more than three years, driven by structural factors as well as regional pressures on pharmacy and outpatient care. New medical technologies were cited by 74% of insurers as the primary driver of cost increases, followed by the decline of public health systems (52%) and pharmaceutical advances (49%).
Cancer is reported as the fastest-growing and most expensive diagnosis globally, identified by 57% of insurers, with about three-quarters observing higher incidence in people under age 40. Cardiovascular disease ranks second as a cost driver, with behavioural health conditions in third place. WTW executives said multinational employers are responding through benefit design and employee engagement, including education on the use of benefits, support for prevention programs targeting high-cost conditions such as cancer, and adjustments to mental health coverage and flexible benefits.
BNM’s RESET framework and the base MHIT plan reflect a regulatory approach that links product standardisation, underwriting and access rules, claims governance, transparency measures, and industry-wide coordination. With Asia-Pacific projected to remain the region with the highest medical cost trend, market participants and regulators in other jurisdictions may look at combinations of similar tools, rather than relying solely on premium changes or isolated product redesigns. Insurers in the region are likely to monitor how MHIT and RESET are implemented over time, including any impact on pre-existing condition coverage, age-related pricing, and claims processes, and whether these elements inform policy and market developments elsewhere in Asia.
