Ed Mhit 202212

Medical and Health
Insurance/Takaful Business
Exposure Draft
Applicable to:
1. Licensed insurers
2. Licensed takaful operators
Issued on: 30 December 2022 BNM/RH/ED 029-29

Medical and Health Insurance/Takaful Business 0 of 49
This exposure draft sets out Bank Negara Malaysia’s (the Bank) proposed
requirements and guidance applicable to licensed insurers and takaful operators
(licensed ITOs) which carry on medical and health insurance/takaful (MHIT)
business, respectively. The proposals in this exposure draft seek to address
developments in the MHIT business as well as to promote more innovative, inclusive
and sustainable MHIT business models to better respond to the needs of consumers
and prevailing operating environment.
The Bank invites written feedback on the proposed requirements and guidance in
this exposure draft, including areas that should be further clarified or elaborated,
and/or alternative proposals that the Bank should consider. The written feedback
should be supported with clear rationale, accompanying evidence or illustrations,
where appropriate, to facilitate an effective review of this exposure draft. In addition
to providing general feedback, licensed ITOs are expected to provide responses to
the specific questions set throughout this exposure draft.
All feedback to the exposure draft should be submitted to the Bank by 15 March
2023 via email to mhit@bnm.gov.my.
Submissions received may be made public unless confidentiality is specifically

requested for the whole or any part of the submission. During the course of
preparing your feedback, you may direct any queries to mhit@bnm.gov.my.
TABLE OF CONTENTS
PART A OVERVIEW ............................................................................................... 1

1 Introduction ............................................................................................. 1
2 Applicability ............................................................................................. 2
3 Legal provisions ...................................................................................... 2
4 Effective date .......................................................................................... 2
5 Interpretation .......................................................................................... 3
6 Related legal instruments and policy documents .................................... 5
7 Policy documents superseded ................................................................ 6
PART B POLICY REQUIREMENTS ....................................................................... 7
8 Underwriting and terms of issue .............................................................. 7
9 Product design ...................................................................................... 12
10 Re-pricing and risk pooling practices .................................................... 15
11 Commisions and incentives................................................................... 18
12 Monitoring and reporting ....................................................................... 20
PART C BUSINESS CONDUCT AND DISCLOSURE ......................................... 23
13 Disclosure requirements........................................................................ 23
14 Needs-based assessment requirements ............................................... 25
15 Prohibition on concluding sales of all MHIT products (including riders)
through telemarketing channel .............................................................. 26
PART D APPENDICES ......................................................................................... 27
Appendix 1 Practices which shall be regarded as unfair .......................................... 27
Appendix 2 Minimum information required to be included in the re-pricing addendum
in respect of individual medical reimbursement insurance/takaful products
to be submitted to the Bank................................................................... 29
Appendix 3 Format for submission of quantitative information for re-pricing of individual
medical reimbursement insurance/takaful products .............................. 32
Appendix 4 Minimum communication requirements for medical re-pricing and regular
updates ................................................................................................. 35
Appendix 5 Sample Product Disclosure Sheet ......................................................... 37
PART A OVERVIEW
1 Introduction
1.1 Medical and health insurance/takaful (MHIT) remains an important component

of health financing in Malaysia. Over the years, the MHIT business continues
to grow as more consumers demand wider access to quality health services
as well as heightened awareness of MHIT cover as a risk mitigation tool to
assist them financially arising from catastrophic health incidences.
1.2 Since 2006, the MHIT business has grown five-fold based on the total
premiums and takaful contributions of MHIT policies/certificates underwritten
by licensed insurers and takaful operators (licensed ITOs). During the same
period, a number of significant developments have also influenced the MHIT
business such as the rise in non-communicable diseases, growth of private
healthcare services and escalating medical inflation. These have contributed
towards an increase in the utilisation of medical services and magnitude of
claims, where the MHIT claims had grown by 11.6% on average annually
between 2006-2021.
1.3 There has also been increased expectations for MHIT business to provide
more comprehensive and inclusive coverage, as well as account for latest
development in medical technologies and supporting preventive care. These
developments have placed increased focus on licensed ITOs to continuously
innovate to meet evolving consumers’ needs while balancing the need to
ensure that the MHIT business remains sustainable in the long term. This is
important to promote continued access to healthcare services while ensuring
that financial support is available via MHIT products when it is needed.
1.4 In this regard, this policy document aims to update the requirements on the
conduct of the MHIT business, in line with the key strategies outlined in the
Bank’s Financial Sector Blueprint 2022-20261 issued on 24 January 2022, to
promote the following:
(a) Ensure that consumers can access a wider choice of MHIT products that
cater to different healthcare needs and within respective consumers’
reasonable means;
(b) Facilitate consumers’ decision-making process when purchasing MHIT
products and promote enhanced understanding of MHIT products;
(c) Protect policy owners’/takaful participants’ interests;
(d) Preserve the continuity and sustainability of the MHIT business through
sound underwriting and pricing policies; and
(e) Facilitate greater data sharing to support better cost control management
and pave way towards greater transparency.
1 (i) Strategy 1: Steer positive change in behaviour among actors in the private medical healthcare
ecosystem so that MHIT coverage remain inclusive and sustainable for policy owners/takaful
participants, and financially viable for licensed ITOs. This includes introducing meaningful co-
payment levels;
(ii) Strategy 2: Support better cost control management by licensed ITOs by leveraging on
digital solutions; and
(iii) Strategy 3: Institute higher standards on business conduct and sales practices amongst
licensed ITOs.
1.5 This policy document sets out the regulatory requirements and operational
flexibilities covering the following areas:
(a) Underwriting and terms of issue;
(b) Product design, including limitations that apply;
(c) Re-pricing and risk pooling practices;
(d) Commissions and incentives;
(e) Monitoring and reporting requirements for MHIT-related data; and
(f) Business conduct and disclosure to consumers.
2 Applicability
2.1 This policy document is applicable to licensed ITOs as defined in paragraph

5.2 which underwrites or offers MHIT products.
2.2 Except where expressly provided for, the requirements apply equally to all
MHIT products of the licensed ITOs, including those offered on a standalone
basis or as riders.
3 Legal provisions
3.1 The requirements in this policy document are issued pursuant to:
(a) sections 47, 123, 143 and 144 of the Financial Services Act 2013 (FSA);
and
(b) sections 57, 135, 155 and 156 of the Islamic Financial Services Act 2013
(IFSA).
3.2 The guidance in this policy document is issued pursuant to section 266 of the
FSA and section 277 of the IFSA.
4 Effective date
4.1 This policy document comes into effect on [a date to be specified in the final
policy document], except paragraphs 12.2 and 12.6 which come into effect on
the dates specified in said paragraphs.
Question 1
The Bank intends to set the effective date to commence three (3) months
after the date of issuance of the final policy document. Would this give
sufficient time for licensed ITOs to implement the enhanced requirements
proposed in this policy document? If not, please provide a suggestion on an
ideal time period required for licensed ITOs to comply, with clear
justifications and areas which would require extended time.
5 Interpretation
5.1 The terms and expressions used in this policy document shall have the same
meanings assigned to them in the FSA and IFSA, as the case may be, unless
otherwise defined in this policy document.
5.2 For the purpose of this policy document:
“S” denotes a standard, an obligation, a requirement, specification, direction,

condition and any interpretative, supplemental and transitional provisions that
must be complied with. Non-compliance may result in enforcement action;
“G” denotes guidance which may consist of statements or information intended

to promote common understanding and advice or recommendations that are
encouraged to be adopted;
“co-payment” refers to a specified amount that a policy owner/takaful

participant must pay upon incurring a medical expense covered under a MHIT
policy/takaful certificate, with the remainder of the medical expense being
covered by the licensed ITO based on the coverage of the MHIT policy/takaful
certificate;
“consumer” refers to individuals or businesses, or both, as the case may be,

who own or intend to purchase any MHIT product;
“deductible” refers to a type of co-payment where the policy owner/takaful

participant bears a specified monetary amount of the medical expenses
covered under a MHIT policy/takaful certificate;
“direct distribution channel” refers to the distribution of insurance or takaful

products through any or both of the following:
(a) the head office and branch premises of a licensed ITO; or
(b) an online platform, whether developed as the licensed ITO’s proprietary
system or outsourced to third party vendors,
whereby consumers purchase insurance or takaful products directly from the
licensed ITO;
“direct MHIT product” refers to any MHIT product that is distributed through
a direct distribution channel;
“free-look period” refers to the period specified in paragraph 8.8 of this policy
document during which a policy owner/takaful participant may examine a
newly issued MHIT policy/takaful certificate and surrender it in exchange for a
full refund of premium/takaful contribution already paid minus any expenses
incurred by the licensed ITO;
“grace period” refers to the additional period of time after the due date of
premium/takaful contribution during which payment may be made by the policy
owner/takaful participant to the licensed ITO without penalty while keeping the
MHIT policy/takaful certificate in force;
“guaranteed yearly renewable policy/takaful certificate” refers to a MHIT
policy/takaful certificate whereby the renewability of the policy/takaful
certificate on its anniversary is at the option of the policy owner/takaful
participant and is non-cancellable by the licensed ITO, subject to conditions
as specified in paragraph 8.15(c) of this policy document;
“homogeneous cohort” refers to a group of medical reimbursement

insurance/takaful products that are assessed to be homogeneous in
accordance with the risk pooling principles as defined in the licensed ITOs’
internal policies and procedures for re-pricing of medical reimbursement
insurance/takaful products;
“industry” refers to the insurance and takaful industry in Malaysia;
“industry associations” refer collectively to the Life Insurance Association of

Malaysia (LIAM), General Insurance Association of Malaysia (PIAM) and
Malaysian Takaful Association (MTA);
“individual policy/takaful certificate” refers to a policy/takaful certificate

issued to an individual consumer as the policy owner/takaful participant. The
policy/takaful certificate may insure/cover any person in whom the policy
owner/takaful participant has insurable interest/permissible takaful interest;
“intermediary” includes any insurance or takaful agent, financial adviser or

Islamic financial adviser, insurance or takaful broker, bancassurance or
bancatakaful partner as defined under the Bank’s policy documents;
“group policy/takaful certificate” refers to a policy/takaful certificate issued

to a legal entity as the policy owner/takaful participant. The policy/takaful
certificate may insure/cover any person in whom the policy owner/takaful
participant has insurable interest/permissible takaful interest;
“licensed ITO(s)” refers collectively to a licensed insurer under the FSA and
a licensed takaful operator under the IFSA;
“medical inflation” refers to the year-on-year increase in the average

treatment cost as billed by the hospitals for surgical treatments and/or non-
surgical treatments covered under the insured’s/covered person’s medical
reimbursement insurance/takaful product;
“medical reimbursement insurance/takaful product” refers to an

insurance/takaful product that provides benefits in the form of reimbursement
of medical expenses, whether inpatient or outpatient and whether in full or in
part incurred by the policy owner/takaful participant;
“MHIT policy/takaful certificate” refers to a policy/takaful certificate that
provides illness benefits or medical, surgical or hospital expense benefits to a
policy owner/takaful participant as a result of diseases, sickness or infirmity.
Benefits may take the form of the reimbursement of medical expenses incurred
by the policy owner/takaful participant, a lump sum payment of the sum
insured/participated, or payment of an allowance or income stream at regular
intervals for the specified period that the policy owner/takaful participant is
incapacitated and/or hospitalised;
“MHIT products” refer to insurance or takaful products falling within the

definition of MHIT policy/takaful certificate, including, but not limited to the
following:
(a) Medical reimbursement insurance/takaful product;
(b) Critical illness or dread disease insurance/takaful product;
(c) Long-term care insurance/takaful product;
(d) Hospital income insurance/takaful product; and
(e) Dental insurance/takaful product.
MHIT products may be offered on a standalone basis or as a rider;
“rider” refers to a supplementary or extension of cover attached to a base life

policy/family takaful certificate that provides additional benefits;
“waiting period” refers to a specified period from the commencement date or

reinstatement date of a MHIT policy/takaful certificate in which a claim cannot
be made to a licensed ITO; and
“yearly renewable policy/takaful certificate” refers to a MHIT policy/takaful

certificate whereby renewability upon policy/takaful certificate expiry is at the
option of a licensed ITO.
6 Related legal instruments and policy documents
6.1 This policy document shall be read together with other relevant policy
documents, guidelines or circulars that have been issued by the Bank,
including any reissuance or amendments thereafter, in particular:
(a) Direct Distribution Channels for Pure Protection Products issued on 3
September 2018;
(b) Fair Treatment of Financial Consumers issued on 6 November 2019;
(c) Guidelines to Control Operating Costs of General Insurance Business
issued on 3 July 2007;
(d) Introduction of New Products by Insurers and Takaful Operators issued
on 15 May 2015;
(e) Investment-linked Business issued on 11 January 2019;
(f) Life Insurance and Family Takaful Framework issued on 23 November
2015;
(g) Management of Customer Information and Permitted Disclosures issued
on 12 October 2021;
(h) Operating Cost Controls for Life Insurance and Family Takaful Business
issued on 24 December 2019;
(i) Perlindungan Tenang issued on 2 July 2021;
(j) Product Transparency and Disclosure issued on 31 May 2013;
(k) Prohibited Business Conduct issued on 15 July 2016;
(l) Prohibitions against Unfair Practices in Takaful Business issued on 30
December 2003;
(m) Guidelines on Proper Advice Practices for Life Insurance/Family Takaful
Business issued on 17 August 2012;
(n) Risk Management in Technology (RMiT) issued on 19 June 2020;
(o) Takaful Operational Framework issued on 26 June 2019;
(p) Unfair Practices in Insurance Business issued on 4 April 2003; and
(q) Universal Life Business issued on 23 December 2019.
7 Policy documents superseded
7.1 This policy document supersedes the following documents:

(a) The Product Disclosure Sheet samples in Paragraph F of Appendix II
under Schedule III and Paragraph F of Appendix II under Schedule IV of
Guidelines on Product Transparency and Disclosure issued on 31 May
2013;
(b) Guidelines on Medical and Health Insurance Business (Revised) issued
on 26 August 2005;
(c) Guidelines on Medical and Health Takaful Business issued on 17
September 2007; and
(d) Specification letter relating to Medical and Health Insurance/Takaful Re-
pricing and Risk-pooling dated 6 January 2022.
PART B POLICY REQUIREMENTS
8 Underwriting and terms of issue
Underwriting policies and procedures
S 8.1 A licensed ITO shall establish clear underwriting policies for its MHIT business
and apply them consistently. The underwriting policies shall, at minimum,
address the following, supported by technical justifications:
(a) parameters for risk evaluation and selection, including any risk
differentials;
(b) categories of risk that the licensed ITO is prepared to accept or is
restricted from accepting;
(c) circumstances under which further information, medical investigations
and/or documentation is required prior to acceptance of risks and the
types of investigations or documentation required;
(d) underwriting authority limits;
(e) concentration limits, including concentrations arising from exposures to
any particular health risk profiles, occupations, individuals or groups; and
(f) required staff competencies, having regard to the need for specialist
knowledge or relevant experience, for the underwriting of MHIT business.
S 8.2 In line with paragraph 13.10 of the Bank’s policy document on Fair Treatment
of Financial Consumers, a licensed ITO’s decision on whether to accept or
renew a risk shall be based on sound and objective underwriting, and actuarial
principles. A licensed ITO shall not refuse to insure/provide cover/accept a risk,
or limit the amount of coverage available, solely on the basis of a refusal by
another licensed ITO or other reinsurers/retakaful operators to insure/provide
cover/accept or renew cover for the same risk, without independently
assessing such risk based on its own underwriting criteria.
S 8.3 In the event a licensed ITO or its intermediaries has received premium/takaful
contribution from a consumer, but the licensed ITO has not confirmed
acceptance of the risk, the licensed ITO shall not repudiate liability for events
insured/covered by the MHIT product that occur before confirmation of
acceptance, if, under the licensed ITO’s established underwriting policies, the
risk would have been accepted as a standard risk.
S 8.4 In relation to paragraphs 8.1 to 8.3, a licensed ITO shall:

(a) undertake periodic reviews to enhance and ensure relevance of its
underwriting policies and procedures for its underwriting decisions. Such
reviews shall take into consideration factors such as developments in
medical treatment and technology to ensure objective and reasonable
underwriting assessment; and
(b) ensure that the underwriting policies and procedures are clear, such
policies and procedures are implemented in a consistent manner and the
underwriting decisions made are in line with the underwriting policies and
procedures. In relation to this, the licensed ITO must:
i) effectively communicate to its staff the underwriting policies and
procedures;
ii) maintain proper records of its underwriting decisions made; and
iii) establish and implement robust monitoring and review mechanisms
to ensure compliance with the licensed ITO’s underwriting policies
and procedures.
Processing of applications for MHIT policy/takaful certificate
S 8.5 A licensed ITO and its intermediaries shall take reasonable measures to:
(a) clearly inform in plain language and assist a consumer applying for a MHIT
policy/takaful certificate in order to fulfil his/her pre-contractual duty of
disclosure; and
(b) facilitate the submission of any information, documentation or medical
investigation required as per paragraph 8.1(c) which may be relevant to
the decision of the licensed ITO on whether or not to accept the risk and
the applicable terms to be applied if the risk is accepted.
S 8.6 A licensed ITO shall inform the consumer of its decision on whether or not to
accept his/her new MHIT policy/takaful certificate application, in writing, within
a reasonable time (which in any event, shall not exceed two weeks from the
receipt of complete information or document from the consumer by the licensed
ITO) that allows the consumer to promptly seek alternative cover in the event
that the licensed ITO declines the risk or imposes conditions on the
policy/takaful certificate that are unacceptable to the consumer. A licensed ITO
shall not unreasonably delay its decision on whether or not to accept the
consumer’s new MHIT policy/takaful certificate application to the extent that
such delay restricts the consumer’s ability to source other MHIT products with
more competitive terms from the market, or results in the consumer becoming
unduly exposed to personal financial risk, due to the occurrence of an event
that would have otherwise been insured/covered had it not been for the
licensed ITO’s delay.
Standardised definitions
-
S 8.7 Where applicable, a licensed ITO shall adopt the standardised wordings for
definitions relating to contractual details of the MHIT policy/takaful certificate as
provided under the Glossary of Terms jointly issued by the industry
associations.
Question 2
a) The Bank has enabling powers under the FSA and IFSA to impose a
requirement on licensed ITOs to issue and maintain the Glossary of
Terms. As such, the Bank expects for the industry associations’ Glossary
of Terms to be adopted by licensed ITOs and in order to operationalise
this, the Bank would require the industry associations to first re-issue the
glossary of terms section only from the (withdrawn) Hospital and Surgical
Insurance/Takaful Underwriting Guide, as stipulated in the Bank’s letter
to the industry dated 20 June 2018. Please provide feedback on this,
including support that is required to ensure smooth operationalisation.
b) Are there any specific standardised definitions (except those that are
medical-related and/or require input from healthcare practitioners) that
the industry views that the Bank should include in the final policy
document?
Free-look period
S 8.8 After the date of delivery of the MHIT policy/takaful certificate to the policy
owner/takaful participant, a licensed ITO shall allow a policy owner/takaful
participant, within a free-look period of 15 calendar days:
(a) to examine the terms and conditions of the policy/takaful certificate; and
(b) the right to terminate such policy/takaful certificate within the free-look
period.
S 8.9 If the MHIT policy/takaful certificate is terminated within the 15 calendar days
free-look period as per paragraph 8.8(b), the licensed ITO shall immediately
refund any premium/takaful contribution which has been paid after deducting
expenses incurred for the medical examination of the policy owner/takaful
participant.
Revisions and modifications to MHIT policy/takaful certificate
S 8.10 A licensed ITO shall only apply any revisions to premium/takaful contribution of
in-force MHIT policies/takaful certificates on the anniversary date or upon
renewal of the policy/takaful certificate, as the case may be. For avoidance of
doubt, the revision to premium/takaful contribution refers to the licensed ITO’s
periodic review of premium/takaful contribution rate due to prevailing claims
experience.
S 8.11 In relation to paragraph 8.10, a licensed ITO shall provide at least 30 calendar
days prior written notification to the affected policy owner/takaful participant
before effecting the revision.
S 8.12 Any revisions2 to an in-force MHIT policy/takaful certificate3 other than as

stated in paragraph 8.10 shall not be done on a unilateral basis during the
coverage term, in particular when the consumer, had at the point of sale,
selected a MHIT policy/takaful certificate that best suits their needs and
affordability.
S 8.13 A licensed ITO may effect revisions other than as stated in paragraph 8.10,
subject to meeting the following conditions:
(a) the revision shall only be effected upon obtaining explicit written consent
from policy owners/takaful participants via an opt-in approach;
(b) in its submission to the Bank under paragraph 8.14, the licensed ITO shall
demonstrate to the Bank that the revision is beneficial to policy
owners/takaful participants and necessary in light of emerging needs or
situations;
(c) the licensed ITO shall communicate to its policy owners/takaful
participants the following minimum information in relation to the revisions
at least 30 calendar days prior to the revisions coming into effect:
i) details of the revision;
2 Include any revisions affecting benefits, terms and conditions of MHIT policy/takaful certificate but
does not include revisions to premium/takaful contribution.
3 For avoidance of doubt, this includes guaranteed yearly renewable insurance policy/takaful
certificate.
ii) consequences of the revision, including impact on the coverage of
the MHIT policy/takaful certificate and/or premium/takaful
contribution or cost of insurance (COI)/tabarru’, and additional
premium/takaful contribution needed to ensure sustainability of
coverage (if applicable) moving forward;
iii) details of communication channel, including the licensed ITO’s
contact information, for the policy owner/takaful participant to raise
queries and discuss with the licensed ITO or its intermediaries on
the revision; and
(d) the licensed ITO shall monitor the claims by policy owners/takaful
participants who opted in for the revision separately from the claims by
other policy owners/takaful participants who did not opt in for the revision.
In this regard, the licensed ITO shall take into consideration any material
risks into the pricing for the MHIT policy/takaful certificate in subsequent
reviews of premium/takaful contribution rates.
S 8.14 In relation to paragraph 8.13, a licensed ITO shall submit the following
information4 to the Bank at least 30 calendar days prior to the offering of such
revision to its policy owners/takaful participants:
(a) details of the revision;
(b) communication materials to policy owners/takaful participants regarding
the revision; and
(c) justification/explanation that the revision is beneficial to policy
owners/takaful participants and necessary in light of emerging needs or
situations.
Continuity of coverage
S 8.15 A licensed ITO shall not:

(a) unilaterally terminate a MHIT policy/takaful certificate during the period of
cover. However, for an in-force MHIT policy/takaful certificate which is
renewable, a licensed ITO may choose not to renew or defer renewal of
the MHIT policy/takaful certificate upon the expiry of the current term,
subject to paragraph 8.15(b);
(b) refuse to renew cover solely due to the policy owner/takaful participant
having made a claim in the preceding year(s). However, a licensed ITO
may, upon renewal:
i) modify the terms and conditions of the MHIT policy/takaful
certificate, subject to fair and reasonable underwriting assessment,
aligned with its internal policies and procedures, as well as
paragraph 8.17; or
ii) impose reasonable level of premium/takaful contribution loading
aligned with established underwriting policies, as the case may be;
or
(c) terminate a MHIT policy/takaful certificate or refuse to renew a MHIT
policy/takaful certificate that is guaranteed renewable, except where
conditions for non-renewal and termination are made in accordance with
the policy/takaful certificate. Such conditions shall be limited to the
following:
4 This is in addition to information required under paragraph 13.10 of the Introduction of New Products
by Insurers and Takaful Operators policy document.
i) if the policy owner/takaful participant commits fraud or
misrepresents material facts during the application for new cover or
renewal;
ii) if any premium/takaful contribution remains unpaid by the policy
owner/takaful participant at the expiry of the stipulated grace period;
iii) if the MHIT policy/takaful certificate expires, lapses or is cancelled,
surrendered or is converted to an extended-term insurance/takaful
product;
iv) if total claims of the MHIT policy/takaful certificate have reached the
lifetime limit specified and/or death of the policy owner/takaful
participant; and
v) if the policy owner/takaful participant ceases to qualify as a
dependant based on the definition of the MHIT policy/takaful
certificate or attains the coverage age limit specified.
Question 3
What are your views on the proposed conditions? Please support your
views with clear rationale, data or illustrations. Are there any other
conditions that should be considered?
x
S 8.16 Any conditions for termination and non-renewal other than as stated in
paragraph 8.15(c) must be approved by the Bank and shall be subsequently
clearly disclosed by the licensed ITO to the policy owner/takaful participant at
the point of sale of the MHIT policy/takaful certificate.
S 8.17 For an in-force MHIT policy/takaful certificate which is renewable, in the event
the MHIT policy/takaful certificate:
(a) will be renewed with modified terms and conditions, a licensed ITO shall
notify the policy owner/takaful participant of its decision to modify the
terms and conditions, and the reasons for the modifications, in writing, at
least 30 calendar days before the MHIT policy/takaful certificate
anniversary date; or
(b) will not be renewed, or renewal is to be deferred or terminated, a licensed
ITO shall notify the policy owner/takaful participant of its decision,
together with reasons, in writing, where appropriate, at least 30 calendar
days before the MHIT policy/takaful certificate anniversary date.
S 8.18 A licensed ITO shall preserve the rights of a policy owner/takaful participant to
cancel the MHIT policy/takaful certificate at any time and upon request by
giving written notice to the licensed ITO within a reasonable time. The licensed
ITO shall refund any premiums/takaful contributions which have been made in
advance subject to the following conditions:
(a) refunds are proportionate based on the remaining period of cover, in
accordance with generally-accepted actuarial principles and having
considered the related expenses incurred; and
(b) refunds are accorded in a manner ensuring the fair treatment of policy
owners/takaful participants.
S 8.19 For purposes of paragraph 8.18, a licensed ITO shall disclose its
premium/takaful contribution refund schedule to the policy owner/takaful
participant at the point of sale and renewal of the MHIT policy/takaful certificate.
9 Product design
G 9.1 A licensed ITO is free to design and innovate its MHIT products that cater to
different market segments and varying individual healthcare needs.
S 9.2 A licensed ITO shall consider the changing demographics and healthcare
needs of the society to ensure meaningful and inclusive protection coverage
when designing MHIT products.
S 9.3 In relation to paragraph 9.2, the licensed ITO must undertake periodic reviews
to ensure that its MHIT products continue to meet the healthcare needs of the
consumers and to cater to advances in medical developments.
G 9.4 To the extent practicable and in line with its risk appetite and business
strategies, the licensed ITO is also encouraged to accord focus on value-
adding benefits or services, such as wellness programmes or preventive care
initiatives, for better health outcomes of its policy owners/takaful participants in
the long term or to help reduce or prevent the underlying risk(s) that is being
covered.
S 9.5 In designing MHIT products, including the inclusion of value-adding benefits or

services, a licensed ITO shall not unreasonably impose excessive
premium/takaful contribution loadings and shall abide by the relevant
requirements and principles specified under the Bank’s policy document on
Fair Treatment of Financial Consumers.
Question 4:
a) In managing the associated (escalating) costs of curative care, what
could licensed ITOs do to support its policy owners/takaful participants
to encourage more preventive care? Can this be part of the MHIT
products to incentivise more healthy behaviours to manage rising claims
costs?
b) Notwithstanding contractual definitions, what would be the potential
challenges and/or risks in operationalising the above expectations,
particularly incorporating preventative care services into MHIT
products? How can these challenges and/or risks be mitigated?
x
S 9.6 To protect the interest of policy owners/takaful participants, a licensed ITO shall
observe the following requirements for an individual MHIT policy/takaful
certificate:
(a) the general waiting period during which the policy owner/takaful
participant is not covered for any illness or sickness that may occur within
that period:
i) shall not exceed 30 calendar days from the effective date of the
MHIT policy/takaful certificate; and
ii) shall not apply to any injuries arising from an accident;
(b) any additional waiting period imposed for specified illnesses as a
measure to mitigate the risk of anti-selection, shall not exceed 120
calendar days from the effective date of the MHIT policy/takaful
certificate. Illnesses that may be excluded during the waiting period shall
also be limited to the illnesses falling within the list of specified illnesses
in the Glossary of Terms to be jointly issued by the industry associations;
Question 5:
a) Please highlight and justify any situations that may require
flexibilities under paragraph 9.6, if any.
b) With reference to paragraph 9.6(b), does your institution impose
new/additional waiting period upon renewal of in-force MHIT
policy/takaful certificate?
c) Similar to question 2, the expectation is for the industry to maintain
the list of specified illnesses and any other medical-related list, due
to residing expertise. Please provide feedback on this, including
support that is required to ensure smooth operationalisation.
d) What type of set-up is appropriate to ensure that the list is reviewed
periodically to ensure relevance?
(c) the exclusion or limitation of coverage for pre-existing conditions, if any,

shall be limited to disabilities which existed before the effective date of
cover and for which the policy owner/takaful participant should have
reasonably been aware of5. The onus of proving that a policy
owner/takaful participant either had knowledge of a pre-existing condition
or should have reasonably been aware of the condition for the purpose of
denying a claim that is excluded as a pre-existing condition, shall lie with
the licensed ITO; and
(d) the survival period in the case of a critical illness or dread diseases
insurance/takaful shall not exceed 30 calendar days from the date the
policy owner/takaful participant is diagnosed with such illness/disease.
S 9.7 In relation to paragraph 9.1, in line with the effort to promote more responsible
usage of medical reimbursement insurance/takaful products to address high
medical claims inflation, a licensed ITO shall:
(a) design all new individual medical reimbursement insurance/takaful
product(s) with co-payment feature, be it in the form of co-insurance/co-
takaful and/or deductible6; and
(b) offer medical reimbursement insurance/takaful product(s) with co-
payment feature as an option to consumers at the point of sale.
5 A policy owner/takaful participant may be considered to have reasonable knowledge of a pre-

existing condition where the condition is one for which:-
a) the policy owner/takaful participant had received or is receiving treatment;
b) medical advice, diagnosis, care or treatment has been recommended;
c) clear and distinct symptoms are or were evident; or
d) its existence would have been apparent to a reasonable person in the circumstances.
6 For avoidance of doubt, licensed ITOs are no longer permitted to design new medical
reimbursement insurance/takaful products without any co-payment feature.
S 9.8 With respect to individual medical reimbursement insurance/takaful products
referred to in paragraph 9.7, the licensed ITO shall:
(a) offer a range of co-payment levels within an individual medical
reimbursement insurance/takaful product that caters to the different
financial needs and capabilities of its policy owners/takaful participants,
but shall set the following level as the minimum co-payment amount within
a policy/takaful certificate year:
i) 5% of total claimable expenses (excluding deductible); and/or
ii) RM500 deductible;
Question 6:
a) Is the minimum co-payment level meaningful enough to minimise
moral hazard among actors in the healthcare ecosystem whilst not
placing undue financial burden on policy owners/takaful
participants?
b) Can the same be accorded to group medical reimbursement
insurance/takaful products? Please elaborate.
(b) set its own maximum limit of the co-payment amount to be incurred by the
policy owner/takaful participant within a policy/takaful certificate year. In
setting the maximum limit, a licensed ITO shall consider the potential
financial impact to the policy owner/takaful participant while ensuring that
the purpose of co-payment in minimising moral hazard is achieved; and
(c) not apply the minimum co-payment level to medical reimbursement
insurance/takaful products approved under the Bank's policy document
on Perlindungan Tenang, or when medical treatment is sought at public
healthcare facilities.
Question 7:
a) What are your views on the proposed requirements above? Please
support your views and suggestions.
b) Are the scenarios for the non-applicability of minimum co-payment
level appropriate? What other scenarios should be considered for
non-applicability of the minimum co-payment level?
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Bundling of MHIT product
G 9.9 A licensed ITO may bundle MHIT product(s) with life insurance or family takaful
product, if the premiums/takaful contributions attributed to the MHIT component
are similarly guaranteed/fixed throughout the life insurance policy/family takaful
certificate term, respectively. A MHIT product is not considered ‘bundled’ if:
(a) the MHIT and life insurance or family takaful components are clearly
distinct and separable; and
(b) the policy owner/takaful participant can terminate his/her MHIT cover
without affecting his/her life insurance/family takaful cover, respectively.
Question 8
How prevalent are bundled MHIT product(s) in your product portfolio? Do
you see relevance of this requirement in today’s context? Please elaborate.
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G 9.10 Notwithstanding paragraph 9.9, a licensed ITO may offer MHIT product(s) in
the form of a rider(s) to a basic life insurance policy/family takaful certificate
without having to guarantee/fix the MHIT premiums/takaful contributions.
10 Re-pricing and risk pooling practices
S 10.1 A licensed ITO shall develop internal policies and procedures for re-pricing of
medical reimbursement insurance/takaful products and ensure that all re-
pricing exercises are carried out in compliance with its internal policies and
procedures. In line with paragraphs 10.3 and 11.1 of the Bank’s policy
document on Introduction of New Products by Insurers and Takaful Operators,
the internal policies and procedures on re-pricing shall be duly approved by
the board of directors of the licensed ITO and properly documented.
S 10.2 Price adjustments in a re-pricing exercise shall be undertaken either on an

individual medical reimbursement insurance/takaful product or a
homogeneous cohort basis. In determining the homogeneous cohorts, a
licensed ITO shall:
(a) balance the objectives of preserving equity7 among different groups of
policy owners/takaful participants and the benefits of risk pooling; and
(b) ensure that the principles and approach of determining the homogenous
cohorts are consistent with sound actuarial principles and existing
regulatory requirements, including Shariah requirements8.
S 10.3 In relation to paragraph 10.1 of this policy document, a licensed ITO’s internal
policy on re-pricing of medical reimbursement insurance/takaful products shall
address the following areas:
(a) overall approach for experience monitoring and re-pricing purposes,
including:
i) the metric(s) used for claims experience monitoring and the explicit
triggers for remedial actions to be carried out. If a licensed ITO
intends to consider other parallel non-repricing initiatives9 prior to
undertaking a re-pricing exercise, the licensed ITO’s internal policies
and procedures must specify the tolerance limit such as in terms of
time frame or loss ratio range, before a re-pricing exercise must be
undertaken; and
ii) scope of data and information to be used in the re-pricing
assessment;
(b) methodology and assumptions adopted for determining the technical risk
rates and the revised premium/takaful contribution or COI/tabarru’ rates,
taking into account the policy owners’/takaful participants’ reasonable
expectations. This includes details on the approach for deriving the
medical claims inflation loading assumption and the number of years the
inflation would be loaded for (i.e. intended re-pricing frequency);
7 Where appropriate, medical reimbursement insurance/takaful products with and without co-payment
features should be pooled separately to be more reflective of the underlying differences in product
design and claims experience.
8 Including paragraph 9.10 of the Bank’s policy document on Takaful Operational Framework.
9 Non-repricing initiatives would include any remedial actions other than re-pricing that are undertaken
with the aim to manage escalating claims experience. Examples of non-repricing initiatives are the
application of data analytics to identify claim leakages or abuses and improving claims management
processes.
(c) principles for risk pooling, including defining the licensed ITO’s
homogeneity criteria in determining homogeneous cohort, for experience
monitoring and re-pricing purposes;
(d) principles surrounding the management of trade-offs between
affordability and sustainability of medical reimbursement
insurance/takaful products that facilitate consistency across re-pricing
assessments, including the following principles:
i) the measurement of affordability;
ii) limits on quantum of revision;
iii) the extent of cross-subsidies allowed within a homogeneous cohort
and the management of such cross-subsidies over time; and
iv) smoothing of rates (e.g. across age groups and products);
(e) avenues for policy owners/takaful participants to seek assistance and
strategies to conserve medical reimbursement insurance/takaful product
coverage, including policy owners/takaful participants who are already in
the lowest plan of the product. The licensed ITO may provide for a
different approach in relation to the conservation of medical
reimbursement insurance/takaful product coverage depending on the
type of products (e.g. standalone versus premium/takaful contribution-
paying rider versus unit-deducting rider);
(f) approach for managing risk pools in the event of decreasing pool size
over time, with considerations for data credibility explicated quantitatively;
(g) stakeholder management and communication strategies including a
comprehensive risk assessment of the impact of any re-pricing of the
medical reimbursement insurance/takaful products to different
stakeholders, as well as specific risk mitigation action plans and targeted
communication strategies to the different stakeholders; and
(h) governance framework and process for re-pricing exercises, including:
i) roles and responsibilities of teams/committees involved in the re-
pricing exercise; and
ii) list of circumstances under which a re-pricing exercise may depart
from the internal policies and procedures (e.g. postponement of re-
pricing), including waivers/exceptions approved by the licensed ITO’s
board of directors in the past.
S 10.4 A licensed ITO shall ensure that its internal policies and procedures relating to
the re-pricing of medical reimbursement insurance/takaful products sufficiently
address practices which may be regarded as unfair to consumers, including,
but not limited to those set out in Appendix 1.
S 10.5 In accordance with paragraph 13.14 of the Bank’s policy document on

Introduction of New Products by Insurers and Takaful Operators, a licensed
ITO shall submit an addendum for the re-pricing of medical reimbursement
insurance/takaful products with reviewable rates to the Bank. The submission
shall be in accordance with paragraph 13.10 of the policy document on
Introduction of New Products by Insurers and Takaful Operators and include,
at minimum, the information set out in Appendix 2 of this policy document and
submitted in the format specified in Appendix 3 of this policy document, where
relevant.
Question 9:
Paragraph 24 of the Guidelines on Medical and Health Insurance Business
(Revised) and Guidelines on Medical and Health Takaful Business allows
the imposition of additional premium/takaful contribution loadings on an
individual policy owner/takaful participant for previous claims made,
provided that such loadings do not exceed 50% of the policy owner/takaful
participant’s premiums/takaful contributions prior to the claims.
However, the Bank is of the view that any premium/takaful contribution

adjustments should be made based on collective experience of the pool as
per the requirement in paragraph 10.2, in line with the principle of risk pooling
and to ensure fair treatment to policy owners/takaful participants who were
underwritten at point of entry.
In this regard, does your institution currently impose any premium/takaful

contribution loading on the policy owner/takaful participant’s renewal
premium/takaful contribution for past claims? If yes, please provide the
following information:
a) What is the level of premium/takaful contribution loading imposed
currently? Please describe the loading structure being applied at the
moment (e.g. tiered based on number of claims made) and provide the
supporting technical assessment or rating model.
b) Are the premium/takaful contribution loading applied to all MHIT
products? Please elaborate if the loadings are only applied to specific
products.
11 Commission and Incentives
Overall maximum commission limits
S 11.1 A licensed ITO shall not pay any commission exceeding the maximum
commission limits set out below in respect of the MHIT products offered by the
licensed ITO:
As a percentage of premium/
takaful contribution
a) Individual policy/takaful
certificate
i) Yearly renewable stand-alone 15%
MHIT policy/takaful certificate
ii) Base life insurance policy/ 171% for a 20-year
family takaful certificate with policy/takaful certificate, pro-
MHIT rider and term exceeding rated accordingly for shorter-
one year, offered by licensed term policy/takaful certificate10
ITOs carrying on life/family
takaful business
iii) Guaranteed yearly renewable as per (ii)
MHIT rider11 where its
premium/takaful contribution
does not constitute more than
50% of the combined
premium/takaful contribution of
the medical reimbursement rider
and base life insurance
policy/family takaful certificate
(excluding non-MHIT riders
attached to the base
policy/takaful certificate)
iv) Other MHIT rider, excluding 15%
items a(ii) and (iii) above
b) Group policy/takaful certificate 10%
Question 10:
In order to establish a common understanding of market practices:
a) How do licensed ITOs currently differentiate between a “guaranteed
yearly renewable policy/takaful certificate”, “conditional renewable
policy/takaful certificate” and a “yearly renewable stand-alone
policy/takaful certificate”? What are the corresponding commission limits
applied by your institution? Please elaborate.
10 The commission payment shall be in accordance with the Bank’s policy document on Operating
Cost Controls for Life Insurance and Family Takaful Business.
11 Guaranteed yearly renewable riders include conditional renewable riders which are subject to
portfolio withdrawal clause.
b) Should the applicable maximum commission limits be reviewed or
streamlined, taking into account the need to specify the different product
categories? Please provide recommendations for (individual) MHIT
products (excluding investment-linked riders).
c) What are the pre-requisites needed to streamline commissions across all
MHIT products (including riders)? What are the challenges that may arise
and how can licensed ITOs effectively manage them?
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S 11.2 In line with the requirements imposed on licensed ITOs carrying on life
business and family takaful business as per paragraph 8.5 of the Bank’s policy
document on Direct Distribution Channel for Pure Protection Products, a
licensed ITO carrying on general insurance business or general takaful
business shall not:
(a) include any commissions into the pricing of premiums/takaful
contributions of any direct MHIT product; or
(b) pay any commissions for direct MHIT products offered.
Additional incentives
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G 11.3 In relation to paragraph 9.7(b), the Bank recognises the potential bias for
intermediaries to promote medical reimbursement insurance/takaful products
without co-payment features. As such, subject to paragraph 11.4, a licensed
ITO may provide additional incentives, whether in commission or in kind, to its
intermediaries to incentivise efforts or minimise potential bias in offering
medical reimbursement insurance/takaful products with co-payment feature,
that go beyond the maximum limit specified in paragraph 11.1 or in any other
related policy documents issued by the Bank.
S 11.4 A licensed ITO shall adhere to the following parameters when providing
additional incentives:
(a) Additional incentives shall be up to a limit where it equalises the
commissions paid (in absolute amount) between medical reimbursement
insurance/takaful products12 with and without co-payment features;
(b) Additional incentives shall not be paid from participants risk fund’s and
insurance funds’ surplus;
(c) Additional incentives shall only be applicable to new policy
owners/takaful participants (first-time consumers) who purchase or
existing policy owners/takaful participants who switch to medical
reimbursement insurance/takaful products with co-payment features;
(d) The difference in premium/takaful contribution between medical
reimbursement insurance/takaful products with and without co-payment
features shall at all times be meaningful; and
(e) Additional incentives shall only be applicable throughout the period of
YYYY till YYYY13.
12 The medical reimbursement insurance/takaful products shall be equivalent in nature (e.g. with
respect to the terms and benefits, etc.) and the co-payment feature would be the only difference. If
there is no equivalent medical reimbursement insurance/takaful products without co-payment
feature, the licensed ITO may estimate the difference in commissions using suitable proxies in
consultation with the Bank.
13 For guaranteed yearly renewable policy/takaful certificate purchased during the period of YYYY till
YYYY, the additional incentives can be accorded over a minimum period of 6 years or the premium/
takaful contribution period, whichever is shorter.
Question 11:
a) How important is it for licensed ITOs to level commission payments
between medical reimbursement insurance/takaful products with and
without co-payment features to minimise potential bias of
intermediaries? Please elaborate.
i. If it is important, what can licensed ITOs reasonably undertake to
operationalise this proposal within the constraints of the current
operating and regulatory environment? Please elaborate.
b) What are the possible sources of funding for the additional incentives?
Based on the funding source stated, what is the impact to (i) policy
owners/takaful participants and (ii) licensed ITOs? Please elaborate,
with the support of data.
c) What are your views on providing additional incentives to products with
high deductibles (e.g. more than RM10k) in view that such products are
typically bought as secondary MHIT cover to meet consumers’ specific
needs (e.g. supplement existing employer medical benefits)?
Please elaborate, with justifications.
d) What are the key considerations/parameters needed to be in place to
ensure meaningful premium/contribution differential at all times? What
are your views on the parameters outlined in paragraph 11.4? Please
support your views or suggestions with clear rationale, data or
illustrations.
e) What are the potential challenges and/or unintended consequences in
operationalising the above? This includes considerations from a Shariah
perspective and compliance with the Bank’s other related policies (e.g.
Operating Cost Controls for Life Insurance and Family Takaful
Businesses). Please elaborate with supporting data/information.
f) What other incentives can be pursued by licensed ITOs to encourage
selling/take-up of medical reimbursement insurance/takaful products
with co-payment features (in addition to fiscal incentives)?
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S 11.5 Notwithstanding paragraph 11.4, a licensed ITO shall monitor the amount of
additional incentives provided and impose performance targets and indicators
on intermediaries (e.g. quality of sales, number of substantiated complaints)
when deciding whether or not to accord additional incentives. The licensed
ITO shall submit to the Bank details of the amount of additional incentives
provided and the identified performance targets and indicators, including
performance and actions to be taken for non-achievement, annually.
12 Monitoring and reporting
G 12.1 Licensed ITOs are encouraged to enhance the collection and standardisation
of MHIT product claims data, particularly medical reimbursement
insurance/takaful products, across the industry to enable greater industry-wide
analysis of medical claims data and facilitate the disclosure of medical inflation
rate. This is critical in supporting better cost control management and
transparency of MHIT cover. Apart from enabling monitoring and analysing
MHIT product claims experience, the central medical claims data platform can
also serve to detect fraudulent claims and pave the way towards publication of
costs of common medical procedures in the long run.
S 12.2 To enable monitoring of the MHIT product claims experience at the industry
level, licensed ITOs shall submit MHIT claims data to a central medical claims
data platform established by the industry beginning 1 January 2024.
S 12.3 In relation to paragraph 12.2, licensed ITOs shall collaborate with industry
associations in appointing an operator to establish the central medical claims
data platform to facilitate the collection and standardisation of the MHIT claims
data.
S 12.4 Licensed ITOs shall collectively ensure that the operator of the central medical
claims data platform takes into the following considerations in establishing the
platform:
Considerations Details
Resilience Ensure a secure IT ecosystem and preserve the
continuity of critical services in adverse situations,
including adherence to applicable laws and relevant
requirements and implementation of necessary
safeguards to manage risks14.
Interoperability Develop an open data architecture adopting
interoperable design principles to transmit and analyse
medical claims data in a more efficient and systematic
manner. This may include allowing the licensed ITOs to
transmit data through open Application Programming
Interface (API).
Comparability Facilitate standardisation of MHIT claims data to enable
greater data comparability across the industry. This may
include developing technical standards and business
rules in standardising procedural and billing codes.
Adaptability Allow flexibility to adapt to emerging developments or
process enhancements, including relating to new
technologies and operating models.
Personal data Protect consumer interests by safeguarding consumers'
protection data confidentiality and privacy. Proper data governance
must be in place covering aspects on information
handling, authentication and authorisation consistent
with relevant laws, policies and guidelines dealing with
data privacy and security.
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S 12.5 Licensed ITOs shall also ensure that the operator of the central medical claims
data platform is able to perform an industry-wide annual15 analysis of the
medical claims data collected through the platform in meeting the objectives set
out in paragraph 12.1.
S 12.6 In relation to paragraph 12.5, licensed ITOs shall ensure that the annual
industry-wide analysis performed by the operator of the central medical claims
data platform shall include, but is not limited to the following information:
(a) Average medical inflation rate16;
14 Including provisions in the Bank’s policy document on Risk Management in Technology (RMiT).
15 For the period of 1 January to 31 December of that calendar year.
16 Year-on-year increase in the average treatment cost billed by hospitals for MHIT products.
(b) Average medical bill amount for MHIT products (by surgical and non-
surgical treatments, by cashless17 and non-cashless claims18, by length
of stay, by geographical regions);
(c) Average bill breakdown in percentage by types of benefit (i.e.
anaesthetist’s fee, in-hospital physician visit, surgical, hospital room and
board, intensive care unit, operating theatre, laboratory and imaging,
medicine, nursing, other hospital supplies and services); and
(d) Top ten diagnoses for medical treatments by frequency and severity.
Beginning 1 January 2025, licensed ITOs must ensure that the operator of the
medical claims data platform has the above information readily available within 30
days after the end of the preceding year and submits the same to the Bank upon
being requested by the Bank.
Question 12:
a) What would be the anticipated challenges that licensed ITOs may face in
fulfilling the requirements set out in paragraph 12? Please provide clear
justifications to support your response.
b) What would be the necessary enablers for licensed ITOs to effectively meet
the requirements set out in paragraph 12? Would licensed ITOs be able to
leverage any ongoing industry initiative (e.g. e-Guarantee Letter platform)
for this purpose? Please provide clear justifications to support your
response.
c) What other objectives, insights or analyses can be achieved through the
central medical data exchange platform for MHIT claims data beyond those
outlined in paragraphs 12.1 and 12.6?
d) What data parameters or metrics should be adopted to accurately capture
the information for analysis purpose outlined in paragraph 12.6?
e) In relation to the effective dates specified in paragraphs 12.2 and 12.6,
would this give sufficient time for licensed ITOs to begin submitting MHIT
claims data to a central medical claims data platform, and ensure that the
platform operator makes the industry-wide analysis readily available? If not,
please provide a suggestion on an ideal time period required for licensed
ITOs to comply and justifications supporting such suggestion.
17 Hospitalisation/surgical bill settled between a licensed ITO and hospital.

18 Hospitalisation/surgical bill settled by the policy owner/takaful participant before filing a claim with
the licensed ITOs.
PART C BUSINESS CONDUCT AND DISCLOSURE
13 Disclosure requirements
S 13.1 A licensed ITO shall:

(a) ensure any information provided to policy owners/takaful participants
relating to any MHIT products is:
i) in line with the Bank’s policy document on Product Transparency and
Disclosure; and
ii) adequate to facilitate comparisons and enable informed decision-
making by policy owners/takaful participants. Such disclosures shall
include, but are not limited to, the key product features, benefits and
risks, exclusions and limitations, fees and charges, and contractual
rights and obligations of policy owners/takaful participants;
(b) ensure any information provided on a MHIT product is consistent with the
contents of its product documentation filed with the Bank; and
(c) provide accurate and timely information to policy owners/takaful
participants on their MHIT policies/takaful certificates at all times.
Point of sale
S 13.2 A licensed ITO shall provide a copy of the product disclosure sheet (PDS) to
consumers, together with any other relevant sales and marketing materials.
S 13.3 In the PDS, a licensed ITO shall provide the consumer the full details of the
fees and charges, including:
(a) For yearly renewable standalone policies/takaful certificates and group
policies/takaful certificates, commissions to be borne by the policy
owner/takaful participant, expressed both in terms of the aggregate
(absolute) amount and as a percentage of premiums/takaful
contributions payable for each policy/takaful certificate year;
(b) For standalone policies/takaful certificates with a term exceeding 12
months, guaranteed yearly renewable standalone policies/takaful
certificates and premium/takaful contribution paying riders, commissions
to be borne by the policy owner/takaful participant, expressed both in
terms of the aggregate (absolute) amount and as a percentage of total
premiums/takaful contributions payable for the years where commissions
are payable to intermediaries;
(c) For unit-deducting riders, to refer the policy owner/takaful participant to
the sales and marketing illustration of the base policy/takaful certificate
for more information;
(d) For MHIT takaful products, to disclose the wakalah fees with further
breakdown by commissions and management expenses, expressed both
in terms of the aggregate (absolute) amount and as a percentage of
takaful contributions payable for each takaful certificate year or the years
where commissions are payable to intermediaries, as per (a) or (b)
above; and
(e) Other fees and charges to be borne by the policy owner/takaful
participant that are not included in the premiums/takaful contributions
and their purpose, respectively.
S 13.4 A licensed ITO shall ensure that the PDS for its medical reimbursement
insurance/takaful products conforms to the format as set out in Appendix 5 of
this policy document. The PDS must not exceed two and a half (2.5) pages.
S 13.5 In conforming to the PDS format set out in Appendix 5 as required under
paragraph 13.4, specifically ‘Step 3’ of the PDS, a licensed ITO shall:
(a) disclose the three-year industry average medical inflation rate, based on
billed amounts for surgical and non-surgical treatments insured/covered
under medical reimbursement insurance/takaful products. The billed
amounts shall include all approved claims, including those unsettled, as
at 31 December of every year;
(b) illustrate the projected premium/takaful contribution or COI/tabarru’ using
the three-year industry average medical inflation rate, compared against
current premium/takaful contribution or COI/tabarru’ upon consumer’s
attained age. The projection must be customised according to
consumer’s entry age, with 5 years intervals for the next 20 years (or until
the end of the MHIT policy/takaful certificate contractual term, whichever
is earlier);
(c) update in the PDS the abovementioned industry average medical inflation
rate and corresponding projections of all medical reimbursement
insurance/takaful products offered by 1 March of every year; and
(d) update in the PDS and disclose the three-year industry average claims
ratio range by 1 March of every year.
Question 13:
a) Until the central medical claims data platform is ready, what are the
possible arrangements that can be put in place for the industry to
compute the medical inflation rate and claims ratio range? For the claims
ratio range, how can the claims data from the platform facilitate the
computation?
b) The Bank expects an annual update of the interim medical inflation rate
and claims ratio range, in ensuring relevance of the figures. Are there
any expected challenges in meeting this timeline?
c) Licensed ITOs which are not in favour of the disclosure of industry
average claims ratio range under Step 3 of the PDS are invited to
propose alternative numerical metrics.
X
S 13.6 In conforming to the PDS format set out in Appendix 5 as required under
paragraph 13.4, specifically ‘Step 5’ of the PDS, a licensed ITO shall:
(a) disclose two alternative product options which are most comparable to
the recommended product in the Product Options Table (POT);
(b) select for disclosure only alternative medical reimbursement
insurance/takaful product options which are distributed through the same
distribution channel as the recommended product;
(c) disclose at least one product with co-payment feature as one of the
alternative product options, in line with paragraph 9.7(b) of this policy
document, in the event the recommended product is not a product with
co-payment feature; and
(d) disclose the total annual premium/takaful contribution for the base life
insurance policy/family takaful certificate with the rider attached, in the
event that the licensed ITO discloses a rider attached to a base life
insurance policy/family takaful certificate.
G 13.7 In disclosing alternative product options in the POT under Step 5 of the PDS,
a licensed ITO may prioritise the following features (in order of importance) for
comparability:
(a) Products with co-insurance/takaful and/or deductible;
(b) Standalone products;
(c) Products offering similar or lower levels of benefits (i.e. hospital room and
board, annual limit, lifetime limit);
(d) Products with similar coverage terms; and
(e) Products with lower annual premiums/takaful contributions.
At point of entering into contract
S 13.8 A licensed ITO shall provide complete information of a MHIT product in the
policy/takaful certificate contract. This includes, but is not limited to, the
following:
(a) Policy/takaful certificate benefits;
(b) Premium/takaful contribution rates;
(c) Fees and charges;
(d) Exclusions and limitations; and
(e) All contractual rights and obligations of policy owners/takaful participants,
including policy/takaful certificate renewals and switching.
During the term of policy/takaful certificate contract
S 13.9 In its communication with policy owners/takaful participants, a licensed ITO

shall give due regard to the policy owners’/takaful participants’ respective
financial circumstances, in particular, the impact of re-pricing on the
affordability of their existing policies/takaful certificates. In line with Principle 3
outlined in paragraph 12 of the Bank’s policy document on Fair Treatment of
Financial Consumers, a licensed ITO must communicate, at minimum,
information in relation to the areas outlined in Appendix 4 of this policy
document to all policy owners/takaful participants of a medical reimbursement
insurance/takaful product.
S 13.10 A licensed ITO shall ensure that policy owners/takaful participants have access
to key information with respect to the management of their medical
reimbursement insurance/takaful products, in line with paragraph 3 of Section
A in Appendix 4 of this policy document. This is to manage consumer
expectations and to facilitate consumers in making informed decisions on the
available product options to preserve their coverage.
14 Needs-based assessment requirements
S 14.1 A licensed ITO shall ensure that its intermediaries obtain sufficient information
about a consumer before providing any advice and product
recommendation(s). This applies to all MHIT products offered, including MHIT
riders purchased upon or after the inception of the base life insurance
policy/family takaful certificate. In this regard, the licensed ITO shall make
appropriate tools and relevant trainings available for intermediaries to conduct
needs-based assessment in their dealings with consumers.
S 14.2 In relation to paragraph 14.1, for MHIT products distributed through

intermediaries, a licensed ITO must ensure that its intermediaries obtain the
following minimum information from the consumer:
(a) financial objectives, needs and priorities;
(b) financial situation, including sources and amount of income;
(c) existing MHIT coverage; and
(d) employment status and whether medical coverage provided by employer.
S 14.3 For standalone MHIT policies/takaful certificates distributed via direct

distribution channel by licensed ITOs carrying on general insurance business
and general takaful business, the licensed ITOs must make available
appropriate tools for consumers to conduct self-assessment on product
suitability, having regard to his/her needs, financial circumstances and risk
profiles. These tools shall include:
(a) a needs analysis calculator to estimate the amount of coverage needed;
and
(b) a financial budget calculator to gauge the affordability of premiums/takaful
contributions payable based on current income, expenditure and financial
obligations.
S 14.4 In relation to paragraph 14.3, a licensed ITO shall set mandatory fields within
the needs analysis and financial budget calculators made available online,
where consumers can only proceed with the transaction after providing key
information in the mandatory fields.
S 14.5 A licensed ITO, including its intermediaries shall not, in any way, prejudice the
purchase decision making of the consumer.
15 Prohibition on concluding sales of all MHIT products (including riders)

through telemarketing channel
G 15.1 A licensed ITO may market its MHIT products and provide information on key
features, terms and conditions through telemarketers.
S 15.2 Notwithstanding paragraph 15.1, a licensed ITO shall not permit telemarketers
to conclude the sale of its MHIT products (including riders) over the phone.
Instead, a licensed ITO shall refer prospective policy owners/takaful
participants interested to make a purchase to qualified sales representatives.
The qualified sales representative shall conduct the needs-based assessment
and recommend MHIT products that best suit the consumers’ needs.
S 15.3 In relation to paragraph 15.2, the licensed ITO shall ensure that the needs-
based assessment carried out by the qualified sales representative is in line
with the requirements specified under paragraphs 14.1 and 14.2.
PART D APPENDICES
Appendix 1 Practices which shall be regarded as unfair
1. Rate increases that are not due to the underlying medical claims experience
A licensed ITO must not revise the rates of medical reimbursement
insurance/takaful products as a result of-
(i) higher profit margin to be generated for the licensed ITO than initial pricing
assumption; or
(ii) increase price of loadings that are not directly attributable to the ongoing
management of the individual product/homogeneous cohort. For example, a
change in the overall expense allocation methodology that results in a higher
share of common expenses being charged to the individual
product/homogeneous cohort.
2. Inconsistent application of risk rating differentials over time on guaranteed

yearly renewable and long-term medical reimbursement insurance/takaful
products
A licensed ITO’s practice of changing rating factors to further differentiate the risk
profiles of the policy owners/takaful participants during re-pricing would not be fair
to consumers, for both guaranteed yearly renewable and long-term medical
reimbursement insurance/takaful products. In particular, adding rating factors
could invalidate the criteria against which entrance to the pool was assessed and
would not be consistent with policy owners’/takaful participants' expectations at the
point of sale.
3. Imposing new waiting periods and underwriting requirements (i.e. additional

pre-existing conditions) when a policy owner/takaful participant switches
from one MHIT product to another MHIT product
The practice of imposing new waiting periods and underwriting requirements (i.e.
additional pre-existing conditions) when a policy owner/takaful participant switches
from one MHIT product to another MHIT product could result in a loss of continuity
of coverage and/or downgrade of coverage.
Question 14
a) For MHIT product switches where the licensed ITO allows a policy
owner/takaful participant to switch to another product, does the licensed ITO:
i. waive underwriting requirements?
ii. include conditions based on claims made in the policy owner’s/takaful
participant’s previous policy/takaful certificate as new pre-existing
conditions?
iii. impose a waiting period upon successful switching?
Please provide rationale for the licensed ITO’s practices above.
b) Is Practice 3 above considered an unfair practice by licensed ITOs? Please
elaborate on the rationale for your response.
c) What would be the challenges in implementing the following safeguards for
MHIT product switching?
i. Clearly disclose the potential consequences (e.g. new waiting periods,
additional pre-existing conditions) to policy owners/takaful participants
who intend to switch to a different MHIT product, within policy/takaful
certificate surrender forms and/or forms to change to different MHIT
products;
ii. In the event a consumer decides not to proceed with the switch within 12
months of the new MHIT product’s inception, to facilitate reinstatement of
the original MHIT product (and corresponding basic policy/takaful
certificate and other riders, if the MHIT is a rider) with no conditions
attached, as if the switch had not taken place at all. If there were any
claims submitted in the interim, to honour the claims according to the
previous MHIT product’s contractual obligations. If 12 months is not a
viable option, please suggest an alternative timeline with justification.
Appendix 2 Minimum information required to be included in the re-pricing
addendum in respect of individual medical reimbursement insurance/takaful
products to be submitted to the Bank
A licensed ITO must submit to the Bank, at minimum, the following information in the
re-pricing addendum of individual medical reimbursement insurance/takaful products:
1. Summary of information for re-pricing, including19:

(i) the affected products, grouped according to homogeneous cohort;
(ii) product type and classification under the Bank’s policy document on
Investment-Linked (“IL”) Business (for IL riders);
(iii) for yearly renewable term (“YRT”) medical reimbursement insurance/takaful
products, whether renewability is guaranteed;
(iv) whether the medical reimbursement insurance/takaful products are open or
closed for new business, and year of closure, if applicable;
(v) the number of affected medical reimbursement policies/takaful certificates;
(vi) the minimum and maximum rate revision20 by percentage and amount for
each medical reimbursement insurance/takaful product, by rate table21.
(vii) the minimum, maximum and weighted average of rate revision by
percentage and amount for each medical reimbursement insurance/takaful
product, by expected impact to existing policy owners/takaful participants;
and
(viii) the amount of increase in premium/takaful contribution rates to meet target
loss ratio at each medical reimbursement insurance/takaful product level.
2. Statistics for each medical reimbursement insurance/takaful product within the

homogenous cohort for the latest five years preceding re-pricing, categorised by
at least plan type (e.g. room and board level), gender and age band 22:
(i) total claims amount (including the incurred but not reported (“IBNR”)
provision, if any);
(ii) total premiums/takaful contributions or COI/tabarru’ received;
(iii) number of policies/takaful certificates23;
(iv) number of claims; and
(v) ratio of actual/expected claims (if available).
3. Explanation on licensed ITO’s compliance with its internal policies and

procedures, including the rationale for any deviations from such internal policies
and procedures. The information that the licensed ITO must submit to the Bank
includes but is not limited to the following:
(i) re-pricing thresholds;
(ii) derivation of the inflation assumption;
19 To be provided according to Table 1(a) and Table 1(b) in Appendix 3.

20 For IL riders and takaful products with dripping model, the rate revision should be expressed as the
change in cost of insurance/tabarru’.
21 Assume at least 1 exposure for each age band and plan type.
22 To be provided according to Table 2 in Appendix 3.
23 For policies/takaful certificates covering more than one person, please adjust the statistics such that
the total number of policies/takaful certificates equals to the total number of covered persons under
the product portfolio.
(iii)scope of the data and information used, including confirmation that ex-gratia
payments24 have been excluded from the re-pricing assessment;
(iv) the extent of cross subsidisation within the homogeneous cohort; and
(v) management of shrinking pool (e.g. whether the re-priced cohort meets the
data credibility criteria and plans to manage remaining policies/takaful
certificates if claims experience is anticipated to deteriorate faster as the risk
pool shrinks).
4. Explanation and numerical examples on:

(i) derivation of morbidity assumption;
(ii) derivation of revised premium/takaful contribution rate or COI/tabarru’
charges (including any further adjustments made to the technical risk rates,
having regard to the licensed ITO’s internal policies and procedures)
including an explanation of the derivation of the rates for each plan type and
age band; and
(iii) derivation of top-up premium/takaful contribution (for IL life policies/takaful
certificates).
5. Range of increase in premium/takaful contribution rate (for conventional non-

IL/single risk fund takaful products) or COI/tabarru’ (for conventional IL/dripping
model takaful products) (both in RM and %) with corresponding number of
policies/takaful certificates impacted at least by plan type and age bands25. For
re-pricing with optional changes to benefits, the information must be submitted
with and without benefit changes.
6. In addition to item 5 of this Appendix, for medical riders of IL plans/takaful products

with dripping model, range of equivalent26 top-up premiums/takaful contributions
required to support the increase in reviewable COI/tabarru’ (both in RM and %),
at least by plan type and age bands, including the distribution of number of
policies/takaful certificates falling within specific range of top-up premiums/takaful
contributions27.
7. Impact analysis due to lapse upon re-pricing (i.e. stress test on higher lapse due
to re-pricing for the next three years).
8. Projected loss/claims ratios for each homogeneous cohort and product after re-
pricing, specifying the historical medical inflation rates, medical claims inflation
rate assumed in projection and any other assumptions used in the projection (e.g.
new business, lapse etc.). The period of projection must be in line with the internal
policy on medical reimbursement insurance/takaful product re-pricing.
24 Ex-gratia payments are voluntary payments made by the licensed ITO in response to a loss event
which does not fall within the contractual terms.
25 To be provided according to Table 3 in Appendix 3.
26 For the purpose of this information, the range of top-up premiums/takaful contributions for IL plans
falling under paragraph 16.8(a) of the Bank’s policy document on Investment-Linked Business must
not include the amount of additional premiums/takaful contributions required to restore overall
policy/takaful certificate sustainability to the end of contractual term.
27 To be provided according to Table 4(a) and Table 4(b) in Appendix 3.
9. Measures to ensure affordability and continuity of medical cover for affected policy
owners/takaful participants (if any), including:
(i) details on available options to policy owners/takaful participants to
downgrade the existing plans as well as options to switch with or without
underwriting considerations;
(ii) comparison of details (e.g. benefits, premiums/takaful contributions and
COI/tabarru’) of existing plan and available options; and
(iii) criteria for downgrading the existing plan and to switch with or without
underwriting considerations, if any.
10. Cost containment initiatives, including claims management actions taken

(including timeframe), and the extent these are imputed into the current re-pricing,
if any.
11. Assessment on policy owners’/takaful participants' reasonable expectations,

including materials used and feedback obtained.
12. Sales tools used, including previous and current training materials, sales and
marketing materials, and PDS.
13. Materials for stakeholder management and communication strategy, including the
notification letter to policy owners/takaful participants, agency toolkit, FAQs for
policy owners/takaful participants, agents and BNM LINK/Regional Offices,
leaflets, and past communications to policy owners/takaful participants regarding
the performance of the medical portfolio, if any.
14. Details of all previous rate revisions, including, for each medical reimbursement
insurance/takaful product under the homogeneous cohort:
(i) the date of the implementation of revision;
(ii) overall range (minimum and maximum) of increase in premium/takaful
contribution rate (for conventional non-IL/single risk fund takaful products)
or COI/tabarru’ (for conventional IL/dripping model takaful products) (both in
RM and %);
(iii) the rationale for revision and the overall target loss ratio or actual/expected
ratio of the re-pricing exercise; and
(iv) the number of policies/takaful certificates affected.
Appendix 3 Format for submission of quantitative information for re-pricing of individual medical reimbursement
insurance/takaful products (to be provided in Microsoft Excel spreadsheet)
Table 1(a): Summary information for re-pricing (general)

Basis of top-
Yearly Open/ Date of
Product up premium/
renewability: closed to closure to
Cohort Product Type takaful Changes to rate table (Notes 3 and 4)
guaranteed/ new new
(Note 1) contribution
non-guaranteed business business
(Note 2)
Percentage (%) Amount (RM) per annum
Min. Max. Min. Max.
16.8(a) or
16.8(b)
Table 1(b): Summary information for re-pricing (based on referenced position)

Referen Number of affected Required % increase to
ced policies/takaful meet target loss ratio (at
Cohort Product Impact of rate change to affected consumers (Note 5)
position certificates (inclusive of product level)
(Note 4) riders) (Note 6)
Percentage (%) Amount (RM) per annum
Min. Max. Wt. Avg. Min. Max. Wt. Avg.
Note:
1. Product type is applicable for licensed ITOs carrying on life business and family takaful business only:
• Life business: investment-linked (IL)/non-IL
• Family takaful business: dripping model/non-dripping model
2. Applicable for IL riders only and in reference to paragraphs 16.8(a) or 16.8(b) of the Bank’s policy document on Investment-linked Business.
3. Assume at least 1 exposure at each age band and plan type.
4. The referenced position is the date which the impact assessment of the re-pricing exercise is based on.
5. For investment-linked riders and takaful products with dripping model, the rate revision should be expressed as the change in COI/tabarru’.
6. If the final quantum of re-pricing is not expected to restore target loss ratio within the timeframe specified in the internal policy, state the required percentage
increase (technical change).
Table 2: Re-pricing statistics for each product

Year X
Plan 1
[ii] Total premiums/ [iii] Number of
[iv] Average [vii]
[i] Total takaful policies/ [iv] [v] Claims [viii] Ratio of Actual
Age band claims Utilisation
claims contributions/COI/ takaful Number ratio to Expected Claims
amount rate
amount (RM) tabarru’ received certificates of claims ([i]/[ii]) (%)
([i]/[iv]) ([iv]/[iii])
(RM) (Note 1)
0 – 10
11 – 20
…
Total
Note:
1. For policies/takaful certificates covering more than one person, licensed ITOs must adjust the statistics such that the total number of policies/takaful
certificates equals to the total number of covered persons under the product portfolio.
2. Age band grouping should correspond with the grouping used in the licensed ITO’s rate tables.
Table 3: Range of increase in premium/takaful contribution rate or COI/tabarru’

Plan 1
Age band Range of increment in premium/ takaful Range of increment in premium/ takaful
Number of policies/ takaful certificates
contribution rate/ COI/tabarru’ (RM) contribution rate/ COI/tabarru’ (%)
0 – 10
11 – 20
…
Total
Note:
Table 4(a): Range of equivalent top-up premiums/takaful contributions required to support the increase in COI/tabarru’, for
medical riders of IL plans/takaful with dripping model, by age band
Age band Plan 1
Range of equivalent top-up Range of equivalent top-up
Number of policies/takaful certificates
premium/takaful contribution (RM) premium/takaful contribution (%)
0 – 10
11 – 20
…
Total
Table 4(b): Range of equivalent top-up premiums/takaful contributions required to support the increase in COI/tabarru’, for
medical riders of IL plans/takaful with dripping model, by range of top up in amount and percentage increase
Plan 1
Range of equivalent top-up Number of policies/ takaful Range of equivalent top-up Number of policies/ takaful
premium/takaful contribution (RM) certificates premium/takaful contribution (%) certificates
0 – 300 0 – 5.00
301 – 600 5.01 – 10.00
… …
Total Total
Note:
Appendix 4 Minimum communication requirements for medical re-pricing and
regular updates
A licensed ITO shall communicate to its policy owners/takaful participants, at

minimum, the information set out below in relation to re-pricing of medical
reimbursement insurance/takaful products:
A. Notification letter of re-pricing to policy owners/takaful participants

1. The notification letters issued by a licensed ITO to its policy owners/takaful
participants regarding re-pricing of medical reimbursement
insurance/takaful products must include–
(a) clear explanation of the factors driving the premium/takaful
contribution rate adjustments, including individual product/cohort-
specific data/statistics (i.e. “change in utilisation rate and average
claims size”28 and medical inflation rate29) to support the
premium/takaful contribution revision quantum and considerations
taken into account in the determination of the rate adjustment;
(b) the revised premium/takaful contribution or COI/tabarru’, compared
with the current premium/takaful contribution or COI/tabarru’;
(c) relevant information on the cost containment initiatives currently
being undertaken by the licensed ITO and/or industry;
(d) clear explanation of alternative options made available specifically to
the affected policy owners/takaful participants to ensure continuity of
cover (i.e. options to switch products or downgrade plan); and
(e) the implications of higher COI/tabarru’ and the need to top-up
premium/takaful contribution to ensure continuity, if applicable.
2. A licensed ITO must ensure that the licensed ITO’s customer service/branch
and intermediaries are adequately trained and equipped to address any
enquiries from the policy owners/takaful participants on the re-pricing
exercise.
3. A licensed ITO must manage consumers’ expectations and understanding
by, among others, directing the consumers to the licensed ITO’s website or
reference QR code for general information on re-pricing of medical
reimbursement insurance/takaful products that is written in plain and simple
language. The general information provided must, at a minimum, cover
areas such as concept of risk pooling, re-pricing effects on policy
sustainability (if applicable) and consequences of discontinuing or
terminating existing coverage.
28 This metric shall be expressed as “XX out of 1,000 policy owners/takaful participants^ made a claim*
compared to YY out of 1,000 policy owners/takaful participants Z years ago. Each claim on average
has increased from RMY to RMX”, where;
“^” refers to insureds/persons covered;
“*” refers to approved claims; and
“Z” shall be either the number of years since the product was first introduced, number of years
since the previous re-pricing exercise or 5 years, whichever is lowest.
29 Three-year average.
B. Other information to intermediaries
1. A licensed ITO shall include, at minimum, the information listed in
paragraphs A1(a) to (e) of Appendix 4 of this policy document in its
communication to its intermediaries to enable them to provide clear
explanation to the policy owners/takaful participants.
C. Other information to be regularly communicated

1. A licensed ITO shall provide yearly updates to its policy owners/takaful
participants on the next premium/takaful contribution increase by age band
(if relevant) and product/cohort-specific average medical inflation per
annum30 to enable them to anticipate and prepare for future adjustments of
premium/takaful contribution rates.
2. A licensed ITO may leverage on the annual/sustainability statements or
yearly renewal notices for this annual update to its policy owners/takaful
participants. For long-term medical reimbursement insurance/takaful
products (i.e. with a term exceeding 12 months) without renewal notice, a
licensed ITO may start issuing personalised annual updates (i.e. specific to
individual policy owner/takaful participant).
3. A licensed ITO shall consider the form of communication (e.g. hardcopy
letters or digital channels) preferred by individual policy owners/takaful
participants to ensure the annual update is effectively communicated.
30 Three-year average. The billed amounts shall include all approved claims, including those unsettled,
as at 31 December of each year and the medical inflation rate shall be updated by 1 February of each
year (i.e. must not be more than 13 months old at point of disclosure).
Appendix 5 Sample Product Disclosure Sheet
5.1 For Standalone MHI and Premium Paying Riders

ABC
COMPANY
[Name of Insurer]
LOGO
[Name of medical reimbursement insurance product]
PRODUCT DISCLOSURE SHEET FIND OUT MORE:
The Product Disclosure Sheet (PDS) provides some of the key information that you should
consider before you buy a medical insurance policy that best meet your needs. You should QR CODE
read your insurance policy contract carefully for full details on your coverage.
Step 1 Is this policy right for you?

• This policy covers hospitalisation and surgical expenses (“H&S”) incurred due to illnesses
covered under the policy until <age>.
• Your premiums will be pooled with other policy owners’ premiums to pay claims. If the total
claims paid out from the pool of fund is high, the premium for all policy owners in the same
pool may increase, including your premiums even if you did not make a claim.
Step 2 Does it meet your needs?

What is covered? What is not covered?
• Hospital Room & Board: __________ • Medical conditions that you had, or had
• Surgical expenses: __________ symptoms of, before buying the plan (i.e. pre-
Benefits payable are on <cashless/pay first, claim existing condition)
later> basis and subject to: • Specified illnesses (e.g. hypertension, diabetes)
• Annual limit: __________ • Diseases required quarantine by law (e.g.
• Lifetime limit: __________ COVID-19)
This is not a complete list. Please read your policy contract carefully for full details on what is and is not covered.
Step 3 Can you afford the increase in premiums over time?
Premium Projection Table

Age Current premium Estimated premium based on medical You can reduce premiums
upon attained age inflation of [7]% per annum1 payable by choosing plans
(RM) (RM) with:
<28> ZZ XX (a) A higher deductible.
<33> ZZ XX (b) A higher co-insurance.
<38> ZZ XX (c) A lower annual/lifetime
<43> ZZ XX limit.
<48> ZZ XX
• The projection above is solely for illustration purposes only.
• The estimated premium is based on both increase by age and an average medical inflation of [7]% per
annum1. The actual premium you will have to pay depends on the actual medical inflation of the plan you
purchased. Factors that may lead to medical inflation include advancements in medical technology, higher
treatment costs and increases in the prevalence of non-communicable diseases over time.
• Bulk of premiums goes to claims. On average, for every RM1.00 of premium paid, RM[0.69-0.80]2 is
allocated to pay claims. The remainder goes to pay commissions to [insurance agent], management
expenses and profits of the insurers.
1
This is the year-on-year increase in the average treatment cost as billed by hospitals to the insurance and takaful industry from years
20XX to 20YY.
2
This is based on insurance and takaful industry average data from years 20XX to 20YY. The actual experience of the plan you purchase
may differ from the industry average.
Deficit
Claims
Current Claims Current

Premium Premium
Others* Others*
Now: Premium sufficiently covers Claims and Future: Arising from medical inflation, Premium
Others may not be enough to cover Claims and Others
* Others include Commissions, Management Expenses and Profits Note: This chart is not drawn to scale
Step 4 What else should you be aware of?

• You must answer the questions that we ask fully and accurately. Failure to take reasonable care in answering
the questions may result in rejection of your claim or termination of your policy.
• If you decide you do not want this policy within 15 days after the policy has been delivered to you, you can
contact us to cancel your policy and receive a full refund (less any medical examination expenses incurred).
• Your coverage will only start [30] days after the effective date of the policy.
• [For yearly renewable standalone MHI] The commissions 3 paid to the [insurance agent] is RMxx or xx% of the
annual premium.
• [For standalone MHI with term exceeding 12 months, guaranteed yearly renewable standalone MHI and MHI
premium paying rider] The commissions3 paid to the [insurance agent] is RMxx or xx% of total premiums over [6]
years.
This is not a complete list. Please read your policy contract carefully for full details on the key terms and conditions.
3
These figures are based on the current premium upon attained age.
Step 5 Have you considered other products that might suit your needs?
Product Options Table
Recommended Product Alternative Product Options
Option 1 Option 2
(Plan with co-payment feature,
Name
[Product Name] if any)
[Product Name] [Product Name]
Annual RM1,585 RM790
RM2,292 You can reduce annual premiums by You can reduce annual premiums by
Premium RM707 RM1,502
Cashless facility Cashless facility Pay First, Claim Later

Type ‘You pay for treatment first and claim
‘We pay direct to hospitals’ ‘We pay direct to hospitals’
from us later’
Coverage Until age 70 Until age 70 Until age 70

Term ‘Renewal is guaranteed but premium ‘Renewal is guaranteed but premium ‘Renewal and premium rates are not
rates are not guaranteed’ rates are not guaranteed’ guaranteed’
H&S: 10% co-insurance up to
Co-
RMXX,
insurance/ RM300 deductible RM300 deductible
Outpatient treatment: 10% co-
Deductible
insurance up to RMXX
Hospital
Room & RM200 per day RM200 per day RM150 per day
Board
Surgical
As charged As charged As charged
Expenses
Annual
RM100,000 RM75,000 RM100,000
Limit
Lifetime
RM1,000,000 RM750,000 Not Applicable
Limit
• Deductible: Fixed amount you have to pay before your actual coverage begins. E.g. RM300 deductible means you
have to pay RM300 out of your own pocket and we will pay the balance (up to the relevant limits).
• Co-insurance: Fixed percentage of a medical charge that you have to pay. E.g. 20% co-insurance means you
have to pay only 20% of each medical bill (up to the relevant limits), and we will cover 80%.
• Annual limit: Maximum amount you can claim in a year.
• Lifetime limit: Maximum amount you can claim throughout your lifetime.
This table does not capture all of the features of products compared. Please ask us/your [agent] for more information on the differences in
features of these products.
Customer’s Acknowledgement
Please ensure you are filling this section yourself and are aware of what you are placing your signature for.
I acknowledge that the intermediary has provided me with a copy of the PDS.
✓ I acknowledge that the intermediary has shown me the contents of the completed PDS and
✓ I agree that a copy of the PDS will be provided to me before the issuance of the policy.
………………………………
Name:
Date:
5.2 For MHI Unit Deducting Riders
ABC
COMPANY
[Name of Insurer]
LOGO
[Name of medical reimbursement insurance product]
consider before you buy a medical insurance policy that best meet your needs. You should QR CODE
read your insurance policy contract carefully for full details on your coverage.
Step 1 Is this policy right for you?

• This policy covers hospitalisation and surgical expenses (“H&S”) incurred due to illnesses
covered under the policy until <age>.
• Units will be deducted from your investment-linked account value into the insurance risk fund
to pay for cost of insurance (COI). Your COI will be pooled with other policy owners’ COI to
pay claims. If the total claims paid out from the pool of COI is high, the COI for all policy
owners in the same pool may increase, including your COI even if you did not make a claim.

• Surgical expenses: __________ symptoms of, before buying the plan (i.e. pre-
Benefits payable are on <cashless/pay first, claim existing condition)
This is not a complete list. Please read your policy contract carefully for full details on what is and is not covered.
Step 3 Can you afford the increase in cost of insurance (COI) over time?
COI Projection Table

Age Current COI upon Estimated COI based on medical You can reduce COI payable
attained age inflation of [7]% per annum1 by choosing plans with:
(RM) (RM) (d) A higher deductible.
<28> ZZ XX (e) A higher co-insurance.
<33> ZZ XX (f) A lower annual/lifetime
<38> ZZ XX limit.
<43> ZZ XX
<48> ZZ XX
• The estimated COI is based on both increase by age and an average medical inflation of [7]% per annum1.
The actual COI you will have to pay depends on the actual medical inflation of the plan you purchased.
Factors that may lead to medical inflation include advancements in medical technology, higher treatment
costs and increases in the prevalence of non-communicable diseases over time.
1
20XX to 20YY.
Deficit
Claims
Claims
Current COI Current COI
Profits Profits
Now: COI sufficiently covers Claims and Future: Arising from medical inflation, COI may not be
Profits enough to cover Claims and Profits
Note: This chart is not drawn to scale

the questions may result in rejection of your claim or termination of your policy.
• If you decide you do not want this policy within 15 days after the policy has been delivered to you, you can
contact us to cancel your policy and receive a full refund (less any medical examination expenses incurred).
• Your coverage will only start [30] days after the effective date of the policy.
• The commissions paid to the [insurance agent] forms part of your premium for your base policy. Please refer to
the Sales Illustration for more information.
This is not a complete list. Please read your policy contract carefully for full details on the key terms and conditions.
Option 1 Option 2
Name
RM2,292 You can reduce annual premiums by You can reduce annual premiums by
Premium RM707 RM1,502

from us later’

Term ‘Renewal is guaranteed but premium ‘Renewal is guaranteed but premium ‘Renewal and premium rates are not
rates are not guaranteed’ rates are not guaranteed’ guaranteed’
H&S: 10% co-insurance up to
Co-
RMXX,
insurance/ RM300 deductible RM300 deductible
Outpatient treatment: 10% co-
Deductible
insurance up to RMXX
Hospital
Board
Surgical
Expenses
Annual
RM100,000 RM75,000 RM100,000
Limit
Lifetime
RM1,000,000 RM750,000 Not Applicable
Limit
• Co-insurance: Fixed percentage of a medical charge that you have to pay. E.g. 20% co-insurance means you
have to pay only 20% of each medical bill (up to the relevant limits), and we will cover 80%.
✓ I agree that a copy of the PDS will be provided to me before the issuance of the policy.
………………………………
Name:
Date:
5.3 For Standalone MHT and Contribution Paying Riders
ABC
COMPANY
[Name of Takaful Operator]
LOGO
[Name of medical reimbursement takaful product]
consider before you participate in a medical takaful certificate that best meet your needs. QR CODE
You should read your takaful certificate contract carefully for full details on your coverage.
Step 1 Is this certificate right for you?

• This certificate covers hospitalisation and surgical expenses (“H&S”) incurred due to illnesses
covered under the certificate until <age>.
• Your contributions will be pooled with other takaful participants’ contributions to pay claims. If
the total claims paid out from the pool of fund is high, the contribution for all takaful participants
in the same pool may increase, including your contributions even if you did not make a
claim.

• Surgical expenses: __________ symptoms of, before participating in the plan
Benefits payable are on <cashless/pay first, claim (i.e. pre-existing condition)
This is not a complete list. Please read your certificate contract carefully for full details on what is and is not covered.
Step 3 Can you afford the increase in contributions over time?

Contribution Projection Table
Age Current contribution Estimated contribution based on You can reduce
upon attained age medical inflation of [7]% per annum1 contributions payable by
(RM) (RM) choosing plans with:
<28> ZZ XX (g) A higher deductible.
<33> ZZ XX (h) A higher co-takaful.
<38> ZZ XX (i) A lower annual/lifetime
<43> ZZ XX limit.
<48> ZZ XX
• The estimated contribution is based on both increase by age and an average medical inflation of [7]% per
annum1. The actual contribution you will have to pay depends on the actual medical inflation of the plan
you participated in. Factors that may lead to medical inflation include advancements in medical technology,
higher treatment costs and increases in the prevalence of non-communicable diseases over time.
• Bulk of contributions goes to claims. On average, for every RM1.00 of contribution paid, RM[0.69-0.80]2 is
allocated to pay claims. The remainder goes to pay commissions to [takaful agent], management expenses
and profits of the takaful operators.
1
20XX to 20YY.
2
This is based on insurance and takaful industry average data from years 20XX to 20YY. The actual experience of the plan you purchase
may differ from the industry average.
Deficit
Claims

Contribution Contribution
Others* Others*
Now: Contribution sufficiently covers Claims Future: Arising from medical inflation, Contribution
and Others may not be enough to cover Claims and Others
* Others include Commissions, Management Expenses and Profits Note: This chart is not drawn to scale

the questions may result in rejection of your claim or termination of your certificate.
• If you decide you do not want this certificate within 15 days after the certificate has been delivered to you, you
can contact us to cancel your certificate and receive a full refund (less any medical examination expenses
incurred).
• Your coverage will only start [30] days after the effective date of the certificate.
• [For yearly renewable standalone MHT] The wakalah fees3 you have to pay are RMxx or x% of annual
contribution, of which commission to [takaful agent] is RMyy or y% and management expenses is RMzz or z%.
• [For standalone MHT with term exceeding 12 months, guaranteed yearly renewable standalone MHT and MHT
contribution paying rider] The wakalah fees3 you have to pay are RMxx or x% of total contributions over [6]
years, of which commission to [takaful agent] is RMyy or y% and management expenses is RMzz or z%.
This is not a complete list. Please read your certificate contract carefully for full details on the key terms and conditions.
3
These figures are based on the current contribution upon attained age.
Option 1 Option 2
Name
RM2,292 You can reduce annual contributions by You can reduce annual contributions
Contribution RM707 by RM1,502

from us later’

Term ‘Renewal is guaranteed but ‘Renewal is guaranteed but contribution ‘Renewal and contribution rates are
contribution rates are not guaranteed’ rates are not guaranteed’ not guaranteed’
H&S: 10% co-takaful up to
Co-takaful/ RMXX,
RM300 deductible RM300 deductible
Deductible Outpatient treatment: 10% co-
takaful up to RMXX
Hospital
Board
Surgical
Expenses
Annual Limit RM100,000 RM75,000 RM100,000
Lifetime Limit RM1,000,000 RM750,000 Not Applicable
• Co-takaful: Fixed percentage of a medical charge that you have to pay. E.g. 20% co-takaful means you have to
pay only 20% of each medical bill (up to the relevant limits), and we will cover 80%.
✓ I agree that a copy of the PDS will be provided to me before the issuance of the certificate.
………………………………
Name:
Date:
5.4 For MHT Unit Deducting Riders
ABC
COMPANY
[Name of Takaful Operator]
LOGO
[Name of medical reimbursement takaful product]
consider before you participate in a medical takaful certificate that best meet your needs. QR CODE
You should read your takaful certificate contract carefully for full details on your coverage.
Step 1 Is this certificate right for you?

• This certificate covers hospitalisation and surgical expenses (“H&S”) incurred due to illnesses
covered under the certificate until <age>.
• Units will be deducted from your [Participant’s Investment Fund] into the [Participants Risk
Fund] to pay for tabarru’. Your tabarru’ will be pooled with other takaful participants’ tabarru’ to
pay claims. If the total claims paid out from the pool of tabarru’ is high, the tabarru’ for all
takaful participants in the same pool may increase, including your tabarru’ even if you did not
make a claim.

• Surgical expenses: __________ symptoms of, before participating in the plan
Benefits payable are on <cashless/pay first, claim (i.e. pre-existing condition)
This is not a complete list. Please read your certificate contract carefully for full details on what is and is not covered.
Step 3 Can you afford the increase in tabarru’ over time?

Tabarru’ Projection Table
Age Current tabarru’ Estimated tabarru’ based on medical You can reduce tabarru’
upon attained age inflation of [7]% per annum1 payable by choosing plans
(RM) (RM) with:
<28> ZZ XX (j) A higher deductible.
<33> ZZ XX (k) A higher co-takaful.
<38> ZZ XX (l) A lower annual/lifetime
<43> ZZ XX limit.
<48> ZZ XX
• The estimated tabarru’ is based on both increase by age and an average medical inflation of [7]% per
annum1. The actual tabarru’ you will have to pay depends on the actual medical inflation of the plan you
participated in. Factors that may lead to medical inflation include advancements in medical technology,
higher treatment costs and increases in the prevalence of non-communicable diseases over time.
1
20XX to 20YY.
Deficit
Claims

Tabarru’ Tabarru’
Profits Profits
Now: Tabarru’ sufficiently covers Claims Future: Arising from medical inflation, Tabarru’ may
and Profits not be enough to cover Claims and Profits
Note: This chart is not drawn to scale.

the questions may result in rejection of your claim or termination of your certificate.
• If you decide you do not want this certificate within 15 days after the certificate has been delivered to you, you
can contact us to cancel your certificate and receive a full refund (less any medical examination expenses
incurred).
• Your coverage will only start [30] days after the effective date of the certificate.
• The commissions paid to the [takaful agent] forms part of your contribution for your base certificate. Please refer
to the Marketing Illustration for more information.
This is not a complete list. Please read your certificate contract carefully for full details on the key terms and conditions.
Option 1 Option 2
Name
RM2,292 You can reduce annual contributions by You can reduce annual contributions by
Contribution RM707 RM1,502

from us later’
Until age 70
Until age 70 Until age 70
Coverage Term ‘Renewal is guaranteed but ‘Renewal is guaranteed but contribution ‘Renewal and contribution rates are not
contribution rates are not rates are not guaranteed’ guaranteed’
guaranteed’
H&S: 10% co-takaful up to
Co-takaful/ RMXX,
RM300 deductible RM300 deductible
Deductible Outpatient treatment: 10% co-
takaful up to RMXX
Hospital Room
RM200 per day RM200 per day RM150 per day
& Board
Surgical
Expenses
Annual Limit RM100,000 RM75,000 RM100,000
Lifetime Limit RM1,000,000 RM750,000 Not Applicable
• Co-takaful: Fixed percentage of a medical charge that you have to pay. E.g. 20% co-takaful means you have to
pay only 20% of each medical bill (up to the relevant limits), and we will cover 80%.
✓ I agree that a copy of the PDS will be provided to me before the issuance of the certificate.
………………………………
Name:
Date:

Ed Mhit 202212

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Ed Mhit 202212

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Medical and Health

Issued on: 30 December 2022 BNM/RH/ED 029-29

Submissions received may be made public unless confidentiality is specifically

PART A OVERVIEW ............................................................................................... 1

1.1 Medical and health insurance/takaful (MHIT) remains an important component

2.1 This policy document is applicable to licensed ITOs as defined in paragraph

5.2 For the purpose of this policy document:

“S” denotes a standard, an obligation, a requirement, specification, direction,

“G” denotes guidance which may consist of statements or information intended

“co-payment” refers to a specified amount that a policy owner/takaful

“consumer” refers to individuals or businesses, or both, as the case may be,

“deductible” refers to a type of co-payment where the policy owner/takaful

“direct distribution channel” refers to the distribution of insurance or takaful

“homogeneous cohort” refers to a group of medical reimbursement

“industry” refers to the insurance and takaful industry in Malaysia;

“industry associations” refer collectively to the Life Insurance Association of

“individual policy/takaful certificate” refers to a policy/takaful certificate

“intermediary” includes any insurance or takaful agent, financial adviser or

“group policy/takaful certificate” refers to a policy/takaful certificate issued

“medical inflation” refers to the year-on-year increase in the average

“medical reimbursement insurance/takaful product” refers to an

“MHIT products” refer to insurance or takaful products falling within the

“rider” refers to a supplementary or extension of cover attached to a base life

“waiting period” refers to a specified period from the commencement date or

“yearly renewable policy/takaful certificate” refers to a MHIT policy/takaful

6 Related legal instruments and policy documents

7 Policy documents superseded

7.1 This policy document supersedes the following documents:

8 Underwriting and terms of issue

Underwriting policies and procedures

S 8.4 In relation to paragraphs 8.1 to 8.3, a licensed ITO shall:

Processing of applications for MHIT policy/takaful certificate

Revisions and modifications to MHIT policy/takaful certificate

S 8.12 Any revisions2 to an in-force MHIT policy/takaful certificate3 other than as

S 8.15 A licensed ITO shall not:

S 9.5 In designing MHIT products, including the inclusion of value-adding benefits or

(c) the exclusion or limitation of coverage for pre-existing conditions, if any,

5 A policy owner/takaful participant may be considered to have reasonable knowledge of a pre-

10 Re-pricing and risk pooling practices

S 10.2 Price adjustments in a re-pricing exercise shall be undertaken either on an

S 10.5 In accordance with paragraph 13.14 of the Bank’s policy document on

However, the Bank is of the view that any premium/takaful contribution

In this regard, does your institution currently impose any premium/takaful

Overall maximum commission limits

b) Group policy/takaful certificate 10%

12 Monitoring and reporting

17 Hospitalisation/surgical bill settled between a licensed ITO and hospital.

S 13.1 A licensed ITO shall:

At point of entering into contract

During the term of policy/takaful certificate contract

S 13.9 In its communication with policy owners/takaful participants, a licensed ITO

14 Needs-based assessment requirements

S 14.2 In relation to paragraph 14.1, for MHIT products distributed through

S 14.3 For standalone MHIT policies/takaful certificates distributed via direct

15 Prohibition on concluding sales of all MHIT products (including riders)

Appendix 1 Practices which shall be regarded as unfair

2. Inconsistent application of risk rating differentials over time on guaranteed

3. Imposing new waiting periods and underwriting requirements (i.e. additional

1. Summary of information for re-pricing, including19:

2. Statistics for each medical reimbursement insurance/takaful product within the

3. Explanation on licensed ITO’s compliance with its internal policies and

19 To be provided according to Table 1(a) and Table 1(b) in Appendix 3.