In its financial stability review for 2H 2025, the central bank said higher net unrealised gains from the equity market recovery were more than offset by a sharper increase in net underwriting losses, which rose to RM3.6 billion in 2H 2025 from RM0.9 billion in 1H 2025.

BNM said the increase in net underwriting losses was partly driven by seasonal factors, including lower premiums following the renewal of group policies, which typically occur in 1H 2025.

“Additionally, premium income continued to be affected by interim measures implemented by the insurance and takaful industry to assist those affected by premium revisions to their medical and health insurance and takaful policies/certificates,” said BNM.

Net underwriting losses were further compounded by higher medical payouts, which rose to RM6.5 billion in 2H 2025 from RM5.7 billion in the preceding half, due to a rise in hospital admissions.

“Compared to the earlier half of 2025, hospital admissions rose across both individual and group medical policies following a spike in respiratory diseases such as influenza.

“A higher incidence of serious medical conditions and surgical procedures also contributed to the overall increase in medical utilisation,” it said.

The central bank said new business premiums in the second half of 2025 grew by 1.6% year-on-year, compared with 4.6% in 2H 2024 and 6.8% in 2H 2023.

The slower growth was attributed to weaker expansion in new business premiums for investment-linked products.

Despite weaker profitability, BNM said the sector remained financially sound due to strong capital and liquidity positions.

“The aggregate capital adequacy ratio for the industry remained healthy at 225% in 2H 2025, up from 223% in June 2025, and well above the regulatory minimum of 130%.

“Accordingly, aggregate capital buffers in excess of regulatory requirements remained sound at RM43.8 billion, compared with RM41.8 billion in June 2025,” it said.