The latest market snapshot from GlobalData;
The Malaysian insurance industry will grow at a compound annual growth rate (CAGR) of 8.4% from MYR 73.1 billion ($17.6 billion) in 2021 to MYR 109.6 billion ($26.7 billion) in 2026, in terms of written premium, led by the life insurance and pension segment, estimates GlobalData, a leading data and analytics company.
According to GlobalData, Malaysia’s insurance industry grew by 7.6% in 2021 after declining by 2.8% in 2020 due to the COVID-19 pandemic-induced economic slowdown. The life insurance and pension segment accounted for 75.8% of written premiums in 2021. It is expected to grow at a CAGR of 9.5% during 2021-26.
Sutirtha Dutta, Senior Insurance Analyst at GlobalData, comments: “The life insurance segment in Malaysia is dominated by endowment and unit-linked products, driven by better returns on these products as compared to bank deposits. To build on the popularity of these products and increase sales, many insurers offer attractive add-ons which include guaranteed annual cash payments, higher returns on maturity as well a higher sum assured in case of accidental death.”
General insurance accounted for the remaining 24.2% share of insurance premiums in 2021. The segment is expected to grow at a CAGR of 4.8% over 2021-26, driven by an increase in vehicle sales and expansion of construction activities in the country.
According to the Malaysian Automotive Association (MAA), motor vehicle sales registered 33% growth in the first half of 2022 compared to the corresponding period last year. The sales are expected to be further boosted by the sales tax exemption for passenger vehicles under the Pemerkasa plus package being offered by the government since 30 June 2022.
Sutirtha continues: “The Malaysian general insurance segment growth will also be driven by the construction sector, which is projected to grow by 11.5% in 2022, according to the Malaysian Ministry of Finance, backed by the acceleration of major infrastructure projects, such as Light Rail Transit Line 3 (LRT3), Mass Rail Transit Line 3 (MRT3), Johor-Singapore Rapid Transit System (RTS) and the Pan Borneo highways in Sabah and Sarawak, with an estimated cost of more than MYR80 billion ($19.4 billion).”
In September 2021, Malaysia launched Perlindungan Tenang Voucher (PTV) Programme. The program is aimed at enhancing social protection for the lower-income group, especially youth and young families, and the lower 40% income group of households, called B40 group.
Perlindungan Tenan (PT) products are offered through licensed insurers and takaful operators. They offer basic insurance or takaful protection against death, fire, or other unfortunate events. According to the Malaysia’s Household Income & Basic Amenities Survey conducted by the Department of Statistics, the B40 group comprised 2.91 million households, as of July 2020.
Sutirtha concludes: “Increasing demand for life insurance products backed by growth in investment-linked policies and the inclusion of the lower income segment of the population in PT insurance policies will drive the growth of Malaysia’s insurance industry over the next five years.”