Malaysia: Insurers cannot cancel critical illness policies arbitrarily, says Deputy Finance Minister

In Malaysia, insurance companies cannot unilaterally cancel critical illness policies. Such actions require specific grounds, including non-payment of premiums or fraudulent activity. Deputy Finance Minister Liew Chin Tong stated in Parliament that policyholders dissatisfied with an insurer's decision have multiple avenues for recourse.

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Insurance companies will not arbitrarily cancel critical illness policies, but only for specific reasons like failure to pay premiums or fraud.

Policyholders can first file a complaint directly with the insurance or takaful company. If the issue remains unresolved, they can escalate the complaint to Bank Negara Malaysia. As a final step, the case can be brought before the Financial Services Ombudsman for resolution.

Chin Tong acknowledged hearing numerous complaints regarding policy cancellations. He urged individuals with unresolved specific cases to bring them to the Ministry of Finance for further action. This statement came in response to a question about whether the government planned to mandate Bank Negara approval before insurers could cancel critical illness policies.

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If there are specific cases that fail to be resolved through these three channels, bring them directly to me and the Ministry of Finance for further action.

The minister also expressed hope that the implementation of the Medical and Health Insurance/Takaful Plan (MHIT) in early 2026 would help resolve issues, particularly the uncontrolled costs at the hospital level. This basic MHIT plan is a government intervention through Bank Negara Malaysia, the Ministry of Finance, and the Ministry of Health, aimed at tackling medical inflation and hospital cost issues long-term. It will incorporate features like co-payments and diagnosis-related group-based payments.

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The basic MHIT plan will be launched and it is an intervention from the government through Bank Negara Malaysia, the Ministry of Finance and the Ministry of Health, because the issue of medical inflation from the insurance side is not only a problem for insurance companies but also a problem where costs at the hospital level are not controlled.