The latest market profile info from GlobalData;
The Malaysian life insurance industry is forecast to grow at a compound annual growth rate (CAGR) of 5.2% from MYR57.5 billion ($13.1 billion) in 2023 to MYR70.3 billion ($15.9 billion) in 2027, in terms of gross written premiums (GWP), according to GlobalData, a leading data, and analytics company.
According to GlobalData, Malaysia’s life insurance industry is estimated to grow by 2.4% in 2023, supported by rising awareness of health and financial planning, low-cost term life and endowment insurance products as well as favorable regulatory developments.
Manogna Vangari, Insurance Analyst at GlobalData, comments: “After witnessing strong growth of 9.3% in 2021, the Malaysian life insurance industry’s GWP witnessed a slower growth of 1.2% in 2022. The reopening of the economy after the pandemic and a lower disposable income led to a change in consumer preference away from non-essential commodities. These impacted the sales of life insurance policies in 2022.”
In terms of key lines of business, endowment insurance is the largest life insurance line in Malaysia and is estimated to account for a 77.2% share in terms of GWP in 2023. The popularity of endowment insurance in the country is driven by investment-linked insurance policies, as they provide better returns as compared to savings products offered by banks and are used as a tool for wealth planning. As a result, endowment insurance is expected to grow at a CAGR of 5.5% over 2023-27.
Term life is the second largest life insurance line, with a 4.6% share of GWP in 2023. Due to a change in customer spending preferences post-COVID-19 pandemic and high inflation, insurers in Malaysia have lately focused on providing low-cost and affordable plans to their customers.
AFFORDABLE SCHEMES
Low-cost products such as the Perlindungan Tenang protection plans are provided by the government as social security for its citizens. These plans were initially launched in 2021, with premium rates starting as low as MYR2.87 ($0.65) per month. However, considering their demand, this has been extended to 2023 for recipients of the Malaysian family assistance program ‘Bantuan Keluarga Malaysia’. It encourages low-income Malaysians to invest in cheaper policies as a part of their financial planning.
Additionally, the growth of term life insurance will be supported by the low-cost plans offered under the i-Lindung scheme. i-Lindung is a self-service platform launched by the government in July 2022 where Employees Provident Fund (EPF) members can purchase affordable life insurance and critical illness policies from approved Insurance & Takaful Operators (ITOs). Term life insurance is expected to be the fastest-growing insurance line during 2023-27, at a CAGR of 6.7%.
In February 2023, the Malaysian central bank, Bank Negara Malaysia (BNM) issued regulations for the development of universal life insurance products to improve transparency and boost sales of these products. In the same month, BNM also issued guidelines on investment-linked insurance policies, including modifications to the format of product illustrations.
Manogna continues: “These guidelines will help improve the code of conduct during the marketing of these products and protect the interests of policyholders. This will improve consumer confidence and help boost sales.”
Whole life and other life insurance products collectively accounts for the remaining 18.1% share of GWP.
Manogna concludes: “Driven by regulatory support and rising demand for low-cost life insurance policies, Malaysia’s life insurance industry is expected to be on a recovery path over the next five years. However, changing consumer preferences, rise in inflation rates, and economic uncertainties could cloud the industry’s growth.”
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