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Kuala Lumpur, 2 April 2014 – On the back of a relatively strong domestic demand, supported by ongoing mega projects, and increased consumer awareness on business and personal risks, the general insurance industry recorded positive growth in 2013 with total gross written premium income increasing by 6.4 percent to RM16.2 billion compared to RM15.2 billion in 2012.
In terms of market share, Motor Insurance remained the dominant class of business underwritten with a share of 46.6 percent of the total business underwritten for the year (2012: 46.0 percent). This was followed by the Fire Insurance class which improved to 17.3 percent (2012: 16.9 percent).
The gross premiums for Motor Insurance posted a steady 7.8 percent increase to reach RM7.5 billion from RM7.0 billion in the previous year. The growth is in tandem with the increase in the number of new vehicles registered in 2013 which had exceeded 655,793 units. However, Motor Insurance remains a challenging class as Net Claim Incurred continued to rise from RM4.2 billion or 72.3% in 2012 to RM4.8 billion or 72.7% in 2013.
The Fire Insurance class, saw an increase of 8.6% to RM2.79 billion compared to RM2.57 billion in 2012. Medical and Health Insurance posted a moderate growth from RM867 million in 2012 to RM912 million last year. Also registering growth in 2013 was Workmen’s Compensation and Employers’ Liability which increased to RM603 million last year from RM567 million in 2012.
The Chairman of the General Insurance Association of Malaysia (PIAM), Chua Seck Guan commented that despite a moderate economic growth, the general insurance industry still managed to benefit from the sustained income growth of the middle-class consumers and also from the increase in domestic and foreign direct investments.
The industry has been experiencing steady increases in its gross written premium income over the last five years, from RM12.0 billion in 2009 to RM16.2 billion in 2013, which clearly defines the industry as stable. In its 2013 Annual Report, Bank Negara Malaysia reported that the current capital buffers of insurance companies, totaling RM23.5 billion, are well above the minimum regulatory requirements. The Bank also stated that insurance companies have the financial stability to withstand sharp contractions in the economy worse than the 2009 financial crisis.
Commenting on the outlook for the Malaysian general insurance industry, Chua said, “The general insurance industry is projected to be on a firm expansion path in 2014. Growth will be supported by domestic demand which is projected to grow by 6.9 per cent this year. The upward trend in CPI inflation is also expected to drive organic growth as consumers review their sum insureds to avoid underinsurance.”
He added “Medical and Health insurance is projected to grow as demand in the healthcare sector will increase in line with the development of Malaysia as a medical hub. Likewise, demand for business and commercial lines such as Fire, Liability, Aviation and Marine insurance, will be driven by improving global economic outlook and higher growth in the SMEs clusters.”
“Further, as announced under the Budget 2014, the RM 120 million integrated package allocated by the Government to SMEs will allow the smaller businesses to upgrade their capacity and improve productivity. The industry sees this as an opportunity for insurers to help local SMEs manage their risks while they shift towards higher-value activities,” said Chua.
In terms of future challenges, Chua highlighted that the liberalization of the insurance sector continues to come under focus in 2014. Malaysia has been regulated by a tariffed market for Motor and Fire classes of business for the past three decades. The industry has to step up its focus on raising underwriting performance, improving claims costs ratios, enhancing productivity, reducing acquisition costs and enhancing consumer protection to be able to compete in an open market.
2013 Total Market Share by Class (general insurance):
|Insurance Class||Total (RM)|
|Marine, Aviation and Transit||1.5 billion|
|Personal Accident||1.2 billion|
|Medical and Health Insurance||920 million|
|Contractors All Risks & Engineering||644.6 million|
|Workmen’s Compensation & Employers’ Liability||233.2 million|
Source: Insurance Services Malaysia Berhad (ISM)
PIAM is the national trade association of all licensed direct and reinsurance companies for general insurance in Malaysia. Currently, PIAM has 29member companies. More information on PIAM can be obtained from its Web site: www.piam.org.my.