Malaysian insurance market faces ‘challenging’ 2017, says association

Growth posted by the Malaysian insurance industry plummeted in 2016 compared with 2015 based on latest numbers published by the national insurance association (PIAM). On the plus side the association believes that liberalisation of motor and fire tariffs announced by Bank Negara Malaysia in June last year will “transform” the insurance landscape in the country. The association also said that it expects the operating environment for 2017 to be as “challenging” as last year given “ongoing uncertainties” in the external environment and a “less than buoyant” economy. “A low growth rate is likely to prevail for the year ahead,” stated PIAM. The association reported that growth in the general insurance industry fell to 1.1% in 2016, as gross written premium income reached RM17.67bn. This was half the 2.2% growth rate achieved in 2015. Motor insurance rose slightly by 0.8% maintaining its dominant share of the overall market at 46.2%. Motor premiums stood at RM8.17bn in 2016 compared with RM8.09bn in 2015. Fire insurance is still the second largest class with a market share of 18.5%. This class recorded a 5% growth at RM3.27bn last year. PIAM reported that medical and health insurance surged 6.6% with gross written premiums reaching RM1.03bn. “This was a positive turnaround compared to the 4% decline in 2015,” stated the association. The “miscellaneous class” that comprises bonds, liabilities, engineering and workmen’s compensation registered a 1.7% growth with gross written premiums reaching RM2.35bn. Marine Aviation and Transit (MAT) insurance declined “significantly” by 7.8% with gross written premiums of RM1.56bn, reported PIAM. This was mainly caused by a reduction in marine hull insurance and a contraction in the oil and gas sector, said PIAM. The Malaysian personal accident class reported a reduction of 0.2% with gross written premiums of RM1.30bn. “Overall the market was affected by weak consumer sentiments and sluggish external trade amidst growing uncertainties in the global environment. The marginal growth rate in the motor class is indicative of the downturn in the automotive market last year. New vehicle sales plunged 13% to 580,000 going below 600,000 cars for the first time since 2009,” explained PIAM. The overall net claims incurred ratio (NCIR) for the industry showed a dip from 56.5% in 2015 to 54.5% in 2016. On a more positive note, PIAM chairman, Antony Lee, said that the phased liberalisation of the motor and fire tariffs announced by Bank Negara Malaysia in June last year will “transform” the insurance landscape in the country. “PIAM will work closely with Bank Negara Malaysia to ensure an orderly transition to a liberalised environment. A National Consumer Education Campaign will be rolled out soon to raise awareness on the Phased Liberalisation with focus on its objectives, benefits and expected outcomes,” said Mr Lee. The association head added that it would be important for consumers to be aware of their insurance needs and risk profiles. “In this way they can make informed decisions given the wide choice of products and covers. They should shop around for the products that would best serve their needs. Consumer engagement and empowerment will be the key differentiating factors in an open and highly competitive marketplace,” said Mr Lee.

Malaysian insurance market faces ‘challenging’ 2017, says association

Want to read this article?

Read Next

Marsh tracks slowdown in global Q1 rate hikes

Markel names head of terrorism in London

Insurers defend Nord Stream’s €400m lawsuit as act of war

Allstate posts nat cat loss of $343m for March

UAE flash flood losses manageable as insurers adapt to changing weather

Marsh tracks slowdown in global Q1 rate hikes

Markel names head of terrorism in London

Insurers defend Nord Stream’s €400m lawsuit as act of war

Allstate posts nat cat loss of $343m for March

UAE flash flood losses manageable as insurers adapt to changing weather

Want to read this article?

Read Next

Marsh tracks slowdown in global Q1 rate hikes

Markel names head of terrorism in London

Insurers defend Nord Stream’s €400m lawsuit as act of war

Allstate posts nat cat loss of $343m for March

UAE flash flood losses manageable as insurers adapt to changing weather

Related Articles