Malaysia's medical claims inflation remains high at 12.28%, driven by claim volume

Malaysia's medical claims inflation persisted at a high rate of 12.28% in 2025, according to the Malaysia Medical Claims Inflation Report 2025. Significantly, the primary driver behind this inflation was not the rising cost of treatments, but rather a substantial increase in the sheer volume of claims submitted.

Of the total 12.28% inflation, 11.22 percentage points were attributed to the growing number of claims. This indicates that increased utilization of healthcare services, encompassing the number of individuals seeking treatment, the frequency of visits, the types of procedures, and the intensity of care, has become the dominant factor in escalating overall claim costs.

This surge in healthcare service usage is reflected in the total payouts by the insurance and takaful industry, which reached RM13.5 billion in 2025, an increase of approximately 10.7% from RM12.2 billion in 2024. Interestingly, the pattern of utilization saw a slight decrease in inpatient claims for the first time, dropping from about 808,200 in 2024 to 803,400 in 2025. Conversely, outpatient claims saw a notable rise, increasing from 314,500 to 354,100.

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The findings show that the utilization of healthcare services, not just medical prices, is the main driver of rising claim costs. Utilization includes the number of individuals seeking treatment, frequency of treatment, types of procedures, and level of care intensity.

While the overall increase in treatment costs was more moderate, with government and teaching hospitals experiencing a 14% decrease in costs, private hospitals saw a 5.86% rise, and private day care centers increased by 2.3%. The pressure from these rising claims has direct implications for medical insurance premiums and takaful contributions, as claims typically constitute 75% to 80% of total premiums.

Industry leaders acknowledge the persistent nature of this challenge. The average annual medical claims inflation has been recorded at 13.63% between 2023 and 2025, a significant jump from the approximately 8% seen between 2013 and 2018. Collaboration among healthcare providers, regulators, and insurance companies is deemed essential to manage utilization trends and ensure the long-term sustainability of medical coverage.

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The data shows that this pressure is not a short-term challenge.