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Kuala Lumpur, 13 August 2015 – The General Insurance Association of Malaysia (PIAM) reported that the general insurance industry grew by 2.3% to RM 9.07 billion in gross written premiums from January to June 2015 compared with the same period last year. PIAM highlighted that this half yearly growth rate was at a slower pace compared to the 6.4% achieved for the first half of 2014 over 2013.
The Association attributed the lower growth rate to a challenging business and operating environment. Contributing factors include a cautious outlook and a moderation in consumer spending as a result of the heightened economic uncertainties coupled with the rising cost of living which mainly affected the motor class being the dominant line of business overall.
Motor Insurance registered a much slower growth rate of 2.1% for the half year compared to 8.3% for the same period last year. Fire Insurance the second largest class saw a higher growth rate of 5% compared to 4.2% last year. The other strong performing lines include Marine, Aviation and Transit (MAT) and Personal Accident with impressive growth rates of 6.1% and 7.4% respectively surpassing their 2014 growth of 0.4% and 4%.
Liabilities insurance declined by 4.9% over the period compared to a 10.5% growth last year while Medical and Health decreased by 6.8% owing to a technical reclassification by a member company of its portfolio from General Insurance to Life Insurance.
With regard to the financial performance the industry turned in a higher underwriting profit of RM754 million compared to RM637 million for the same period last year, with the industry’s loss ratio improving to 56.7% from 58.4% during the first half of 2014.
Highlighting the critical issues faced by the industry PIAM Chairman, Chua Seck Guan said, “Top line premium growth for the dominant Motor sector slowed considerably while the industry continued to bear the heavy burden of increased claims costs. Although there are encouraging signs of a slower rate of increase in motor claims costs the industry has to remain vigilant and focus on its various initiatives and projects to better manage and contain claims cost.” For the first half of the year total motor claims climbed to RM2.69 billion an increase of 3% over the same period last year. The corresponding increase was 11% during the first half of 2014 over 2013.
A positive development for the industry is the reduction in motor vehicle theft cases. In 2014 the number of vehicle theft cases for all classes reduced by 19% the first time in many years. Based on latest estimates the number of vehicle theft has continued on the downward trend. PIAM’s Chief Executive Officer Mark Lim said that “Over the first 6 months of 2015 total number of theft cases for all vehicle classes stands at 10,559 (as at end June) which is 34% of the total number of vehicle theft cases for 2014 (31,195). This is indeed an encouraging sign although not all the theft numbers may have been fully reported or processed by the industry. PIAM applauds and compliments the sustained efforts and commitment by the Police, Customs and other law-enforcement agencies in bringing the car thieves to justice. The Association will work closely with the Vehicle Theft Reduction Council (VTREC) which brings together all stakeholders, both governmental and private sector in a collective effort to combat the problem”.
On the important topic of road safety, PIAM will continue to promote and raise awareness of the Accident Assist Call Centre (AACC) which offers peace of mind to all motorists on the roads. Basically the AACC provides emergency assistance and information to all motor insurance policyholders involved in accidents. The Toll-Free Hotline 1-300-221188 also offers towing services and helps motorists with all claims queries.
Moving forward the industry will continue to focus on human capital and talent. This is to ensure a continuous and sustained flow in its talent pipeline which is critical to support the steady growth of the industry year after year.
PIAM launched the General Insurance Internship for Talent (GIIFT) project on 1 July 2015 with 10 participating member companies. This is an industry wide program positioned to showcase the industry and profile the spectrum of career opportunities available to undergraduates of all study disciplines at the universities. PIAM’s Deputy Chairman and Convenor for its Education/Human Resource Development Sub-Committee Antony Lee added “ We provide these young talent a unique 3 month internship experience at PIAM’s companies by exposing them to the dynamic world of general insurance through project work and other business-related assignments.” The Association will commence its second intake of interns in October.
At the briefing PIAM also highlighted its recently revamped Corporate Web-site which has been refreshed with a modern and more user-friendly look and feel. It is a one-stop information centre on general insurance for both consumers and the business community. New online services and tools have been incorporated for the benefit of the public and to enhance overall consumer experience. These include an Agent Search Portal to enable the public to verify if the insurance agent they are dealing with is registered with PIAM and a dedicated e-channel on Fraud Reporting for consumers to report any suspected fraudulent activities. Alternatively they can call the industry fraud hotline 1300-221188.
While growth for the first half of 2015 has slowed PIAM is cautiously optimistic that the second half will be better. Over the past years the general insurance industry has proven its resilience and robust nature time and time again. Notwithstanding the headwinds and the challenging economic and uncertain operating environment, demand for insurance products and risk management solutions should remain steady driven largely by individual and business needs for better protection, and increasing awareness about insurance risks and benefits. And underpinning all these is the strong fundamentals of the Malaysian economy and the sound regulatory regime of its financial services system.