Malaysian insurers are anxious about their market’s life insurance and takaful penetration stagnating at 55% over the past three years.
As the industry struggles to stay on track towards its target of 75% insurance penetration by 2020, Ng Keng Hooi, group CEO of global insurer
AIA, said that providing tax perks for insurance expenses could be the answer – incentivising more people to buy insurance.
In an interview with state media arm Bernama, Ng said: “The government should increase tax relief for life and medical insurance policies to improve insurance penetration rate in Malaysia.”
He reasoned that unlike more developed Western nations, Malaysia does not have an adequate social safety net, and that people had to take care of their own security.
“Hence, we have always been encouraging the government to use fiscal policy and take necessary steps to promote the insurance industry,” he added.
If the government provided tax perks for insurance, the insurance premiums Malaysians pay would seem more appealing – and would ultimately provide them protection. It would also lessen the burden on the government brought by public health expenditures.
Ng said the difference in the Malaysian life market from China’s was that the former is more protection-focused, while the latter prefers short-term savings products.
Ng, who is also one of the founders of Prudential BSN Takaful (PruBSN), said the penetration of takaful, or Islamic insurance, also remains low. He estimated it at only 10% to 20% of the current 55% total penetration rate.
PruBSN is currently the largest takaful player in the Malaysian market, Ng said, with AIA Public Takaful in second place. Despite his history with AIA’s competitor, he is confident that his current company can overtake its local rival.
“Our (AIA Public Takaful) aspiration is to beat PruBSN” he said.
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