Higher Healthcare Utilisation Adds To Medical Claims Inflation -- LIAM
By K. Naveen Prabu
KUALA LUMPUR, Sept 11 (Bernama) -- Rising healthcare utilisation is emerging as a key contributor to Malaysia’s medical claims inflation, highlighting the need for greater efficiency, transparency and collaboration across the healthcare ecosystem to keep medical protection affordable and sustainable, according to the Life Insurance Association of Malaysia (LIAM).
Its chief executive officer Mark O’Dell said while medical claims inflation reached 12.28 per cent in 2025, data from the Malaysia Medical Claims Inflation Report 2025 showed that 11.22 percentage points of the increase were driven by a higher number of claims, with the balance attributable to the rising cost of care.
“Medical claims inflation and medical cost inflation are not the same thing. The latest data showed that increased utilisation is a significant contributor to the growth in medical claims,” he told Bernama.
O’Dell said the 12.28 per cent medical claims inflation rate should, therefore, not be interpreted as an equivalent increase in the cost of medical treatment.
“This does not mean Malaysians should use less healthcare. Seeking treatment when it is needed is important. The challenge is to ensure that healthcare is used appropriately and efficiently, and that the system delivers good health outcomes at sustainable costs,” he said.
He said the cost of care also varied across healthcare settings, with claims involving public and teaching hospitals, which accounted for 9 per cent of total claims, recording a 14 per cent decline in cost, while costs rose by about 5.9 per cent in private hospitals and 2.3 per cent in private day-care facilities.
O’Dell said the insurance and takaful industry paid RM13.5 billion in medical claims in 2025, compared with RM12.2 billion in 2024, a 10.7 per cent rise.
The increase reflects growing demand for healthcare among Malaysians covered by medical insurance and takaful, he said. This underscores the need to look beyond individual treatment costs to understanding factors driving overall healthcare expenditure.
Rising Utilisation can be a Positive Sign
O’Dell said the increase in utilisation should not be viewed solely as a negative trend. It can also reflect positive developments such as a rise in health awareness, earlier detection of illnesses, improved access to treatment and Malaysians seeking treatment sooner.
“The objective is not to discourage healthcare utilisation, but to ensure that healthcare resources are used appropriately, and that patients receive the right care, in the right setting, at a sustainable cost,” he said.
O’Dell noted that the industry believes greater transparency, appropriate care pathways, better use of data and stronger measures to address fraud, waste and abuse can contribute to a more efficient healthcare system.
“This includes efforts to give consumers greater visibility of costs to enable them to make more informed decisions about their healthcare,” he said.
A Whole-of-Ecosystem Issue
According to O’Dell, the rising claims trend should not be viewed as an issue involving insurers and takaful operators alone because medical claims ultimately reflect developments across the wider ecosystem.
“Insurers and takaful operators finance healthcare, but they do not operate hospitals, determine clinical practices or decide when or where a patient seeks treatment.
“Therefore, addressing the sustainability of medical protection requires collaboration across the entire ecosystem, including policymakers, healthcare providers, doctors, insurers and takaful operators, as well as consumers,” he said.
He said the objective is to ensure that Malaysians continue to have access to quality healthcare while keeping the overall cost of financing sustainable.
This is particularly important as medical claims account for around 75 to 80 per cent of insurance premiums and takaful contributions.
“Ultimately, we all share the same objective — Malaysians should be able to receive the healthcare they need without medical protection becoming unaffordable,” he said.
Keeping Medical Protection Sustainable
O’Dell said the implications of continued claims growth extend beyond insurers and takaful operators; prolonged growth in claims at a pace faster than the underlying financing pool will increase pressure on affordability and sustainability of medical protection.
“The industry believes structural reforms across the ecosystem are important. The objective is not simply to reduce claims. It is to ensure that every ringgit spent on healthcare delivers value, while Malaysians continue to have access to quality care when they need it,” he said.
Reforms should ultimately create an environment in which patients receive appropriate care, healthcare providers can operate sustainably, and insurers and takaful operators can continue providing viable medical protection, he said.
Long-term Reforms Key to Sustainability
O’Dell said the industry expects medical claims growth to remain elevated in the near term due to continued utilisation and service intensity. The precise level of claims inflation, however, remains uncertain, making longer-term reforms increasingly important.
A sustainable system should allow Malaysians to access quality healthcare when needed. It should enable healthcare providers to deliver care sustainably. It should also ensure medical insurance and takaful protection remain affordable and viable.
“The industry is working closely with various stakeholders under the Reforming the Medical and Health Insurance/Takaful Ecosystem (RESET) agenda to achieve the same objective — better health outcomes, greater transparency, more efficient use of resources and sustainable healthcare financing,” he concluded.
-- BERNAMA