The Malaysian insurance market has favourable growth prospects and a stable outlook, according to ratings agency, RAM Ratings.
In the agency’s latest look at the emerging market, RAM Ratings said that the industry’s strong capital levels and regulatory reforms “augur well” for the development of the insurance sector.
“Amid expectations of a delicate economic recovery, general insurance gross premiums growth is anticipated to stay below 2% in 2017,” the agency said.
Want the latest insurance industry news first? Sign up for our completely free newsletter service now.
Meanwhile, subdued consumer sentiment and inflationary pressures will slow the pace of life insurance gross premiums growth to about 5% this year.
The regional rating agency noted that the growth of the takaful sector is expected to be higher than that in general and life insurance. The family takaful sector will underpin the growth in the market with a substantially lower penetration rate relative to life insurance.
Last year saw challenging market conditions in Malaysia, which saw marginal growth in the general insurance sector of 0.9% in terms of gross premiums.
Life insurance gross premiums grew by 7.5%, while family takaful led the charge with growth of 11.8%.
Looking to next year, the ratings agency noted that regulatory changes will spur an improvement in product innovation and risk selection criteria for both general insurance and takaful operators.
Tariff liberalisation in both fire and motor may see some initial price undercutting but will ultimately benefit the industry. In life and family takaful, regulation to promote operational efficiency and an increased focus on direct commission-free distribution will lead to more affordable products.
“Regulatory reforms are expected to support the industry’s growth prospects, which remain favourable, despite some near-term moderation,” the agency said.
Insurance starter pack for low-income earners to debut in Malaysia
Insurers to promote healthy lifestyle via football