MEF president Syed Hussain Syed Husman said the hike would inevitably impact the cost structure and financial health of businesses, affecting operations and constraining cash flow.

MSMEs, which operate on tighter budgets, could be forced to hike the prices of their products and services, he said.

“These price adjustments could erode their competitive edge, as higher prices may drive away customers and reduce their market share.

“Moreover, if many businesses pass on increased costs to consumers, this could contribute to broader economic inflation, affecting the general price levels within the economy and decreasing the purchasing power of consumers,” he said in a statement.

Syed Hussain also warned that financial pressures from an insurance premium hike could lead to some employers reviewing the fringe benefits offered to employees, particularly health insurance.

He said some might offer less comprehensive health benefits or reduce coverage levels to mitigate the increased costs.

Bank Negara Malaysia (BNM) is expected to announce details of its interim measures to address the rise in medical insurance premiums this week.

It was earlier reported that medical insurance premiums were expected to rise by between 40% and 70% next year, based on notices sent by insurance providers to policyholders. Insurers attributed the hike to rising healthcare costs at private hospitals.

Finance minister II Amir Hamzah Azizan said the central bank would ensure that the increase in insurance premiums was implemented in an orderly and gradual manner, along with other assistance for certain groups.

Several PKR MPs have since urged BNM to limit insurance premium hikes to 10%.