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

In 2025, Malaysia's medical claims inflation surged by 12.28 percent, with a significant portion of the increase stemming from higher healthcare usage, according to a recent industry report. The Malaysia Medical Claims Inflation Report 2025 revealed that 11.22 percentage points of the rise were attributed to a surge in the number of claims, while the remainder was linked to elevated healthcare expenses.

Insurance and takaful firms disbursed RM13.5 billion in claims in 2025, a 10.7 percent rise from RM12.2 billion in the previous year, indicating that factors beyond medical prices, such as usage, play a major role in escalating claims costs. Life Insurance Association of Malaysia CEO Mark O’Dell emphasized that the findings corroborate the World Bank’s assessment of Malaysia's Medical and Health Insurance/Takaful sector, highlighting healthcare utilization and service intensity as crucial contributors to the surge in medical claims costs.

The report also emphasized that public hospital claims, making up 9 percent of total claims, experienced a 14 percent reduction in costs compared to the previous year, while private hospital care costs grew by 5.89 percent. Factors such as an aging populace and escalating non-communicable diseases are driving up healthcare utilization.

Inpatient claims slightly declined from 808,200 in 2024 to 803,400 in 2025, whereas day-care claims increased from 314,500 to 354,100. Common diagnoses for inpatients include heart disease, disc disorders, infectious gastroenteritis, pneumonia, and bronchitis, while day-care claims are dominated by cataract, breast cancer, gastritis, lung cancer, and various eye disorders.

The Malaysia Takaful Association's CEO, Mohd Radzuan Mohamed, underscored that average annual medical claims inflation rose to 13.63 percent between 2023 and 2025, a sharp contrast to the 8 percent average between 2013 and 2018. To curb the rising claims costs, the industry suggests implementing measures such as deductibles, co-insurance or co-takaful, Malaysia's RESET initiative, MediAsas, and Diagnosis Related Group-based billing, alongside heightened healthcare cost transparency and enhanced use of claims data to uncover fraud, waste, and abuse.

The report forecasts a continuation of double-digit claims growth in the near term, though predicting the precise level of medical claims inflation for 2026 remains challenging.