THE government has outlined a series of regulatory measures to strengthen oversight of insurance and takaful products, particularly medical and health insurance and takaful (MHIT), in order to protect policyholders from arbitrary policy cancellations, retrospective claim rejections and unclear disclosure requirements.
Responding in the Dewan Rakyat, Deputy Finance Minister Liew Chin Tong said the government is aware of growing concerns among policyholders regarding the continuity and reliability of insurance coverage, especially for patients with critical illnesses and cancer.
He said insurers and takaful operators (ITO) are required to comply with the Medical and Health Insurance/Takaful (MHIT) Policy Document issued by Bank Negara Malaysia (BNM), which sets out strict standards governing the conduct of the industry.
Under the framework, insurance and takaful operators are not permitted to unilaterally cancel policies or certificates, nor can they terminate or refuse renewal solely on the basis of past claims or changes in the policyholder’s health condition after coverage has commenced.
The minister said claims must be assessed fairly in accordance with contractual terms, including verification that treatment falls within the scope of coverage and is medically necessary.
He added that assessments are guided by standard treatment protocols and clinical practice guidelines, including those issued by the Ministry of Health, and are typically conducted prior to treatment at most hospitals to prevent policyholders from being burdened with unexpected retrospective costs.
In cases where treatment does not follow standard protocols, insurers are required to conduct further review. However, if the treatment is ultimately deemed medically necessary, the claim must still be honoured.
He said these processes are being further strengthened through the Healthcare and Payment Protocols Steering Committee (HPPSC), which brings together the government, medical industry stakeholders, hospitals, insurers, takaful operators and Bank Negara Malaysia to address disputes related to MHIT claims.
Recent initiatives by the committee include promoting best practices in determining coverage for new medical technologies and treatments.
The minister also said BNM is considering introducing a broader moratorium on retrospective claim rejections, commonly referred to as a “no look-back” provision.
This would mean that after a policyholder maintains continuous coverage for a specified period, insurers would no longer be allowed to reject claims on the basis of undeclared pre-existing conditions that were not intentionally withheld.
He noted that industry data up to 2025 shows that insurers and takaful operators maintain an average claims approval rate of more than 90 per cent, with more than one million claims processed annually.
Policyholders with complaints are advised to first contact their insurer or takaful operator directly. If disputes remain unresolved, they may escalate the matter to BNMLINK or file a case with the Financial Market Ombudsman Service (FMOS), both of which provide free dispute resolution services. - July 6, 2026
