Malaysia’s insurance industry to have muted growth prospects in 2019

Malaysia’s insurance market is expected to remain stable throughout 2019, according to an industry report released by RAM Ratings

According to RAM, general insurance premiums are expected to remain stagnant amid the progressive impact of tariff liberalisation and a slowdown in the country’s economic growth.

“General insurance premiums rose 1.8% to MYR17.6 billion (US$4.3 billion) in 2018 after a mild contraction the year before, supported by growth in the motor, as well as medical and personal accident segments,” the report by RAM said. “While fire premiums also saw an increase, future growth will be limited as competition intensifies in this high-margin segment.”

RAM added that a clearer picture of the impact of Bank Negara Malaysia’s liberalisation of motor and fire tariffs will emerge this year – three years after the central bank initiated the efforts. Motor and fire insurance combined for 67% of general insurance premiums last year.

Meanwhile, new business premiums for life insurance are expected to grow by 1% to 2% due to weaker consumer sentiment and concerns over the rising cost of living. In 2018, new business premium growth was at 1.8%, totalling MYR 10.3 billion (US$2.52 billion).

The report said that new business growth may be hindered in the coming years as the industry adapts to new regulations concerning investment-linked insurance.

“Among others, the revised guidelines require sustainable premium pricing, sustainability tests of insurance coverage, and more conservative investment return illustrations in sales and marketing materials,” it said.