The latest market snapshot from GlobalData looks at Malaysia;
The Malaysian life insurance industry is forecast to grow at a compound annual growth rate (CAGR) of 5.2% over 2024–28, from MYR63.2 billion ($13.9 billion) in 2024 to MYR77.3 billion ($17.2 billion) in 2028, in terms of direct written premiums (DWP), according to GlobalData, a leading data and analytics company.
GlobalData’s Insurance Database reveals that the Malaysian life insurance industry is expected to grow by 5.9% in 2024, driven by an uptick in consumer spending led by robust economic recovery, favorable regulatory reforms aiming to promote digitalization, and the country’s growing demographic trend of an aging population.
Manogna Vangari, Insurance Analyst at GlobalData, comments: “The Malaysian economy exhibited a robust growth of 4.2% in the first quarter of 2024 from the 2.9% growth recorded in the fourth quarter of 2023. This growth was primarily attributed to heightened private expenditure and enhanced investment activities. As per GlobalData Macroeconomic forecast, the economy is further expected to grow at an annual average rate of 4.4% over 2024–26, which will support the growth of life insurance.”
Endowment insurance is the largest line of business and is expected to account for a 77.3% share in total life insurance DWP in 2024. In 2023, linked insurance products saw a 7.8% increase in DWP as compared to 1.5% growth in 2022 while non-linked insurance premiums witnessed an increase of 4.4%. Increased interest rates and improved labor market conditions prompted a shift in consumer demand towards wealth accumulation products, which will support the growth of endowment insurance. Endowment insurance is expected to grow at a CAGR of 5.1% over 2024-28.
Vangari adds: “Favorable regulatory reforms will also support life insurance growth. In July 2024, the Central Bank of Malaysia released a comprehensive Policy Document on Licensing and Regulatory Framework for Digital Insurers and Takaful Operators, aiming to foster the digital transformation of the insurance sector. This framework is part of the Financial Sector Blueprint 2022–2026, which seeks to promote inclusion, competition, and efficiency through digitalization.”
Whole life insurance is the second leading line that is expected to account for a 7.5% share of DWP in 2024. It is expected to grow by 2.3% in 2024, driven by the country’s changing demographic trend of an aging population with a growing life expectancy.
As per GlobalData forecasts, the share of the population aged 65 and above is expected to increase from 8.1% in 2023 to 8.7% in 2025. Additionally, the old age dependency ratio was recorded at 11.7% in 2023, which is expected to increase to 12.6% in 2025. Whole life insurance is expected to grow at a CAGR of 1.9% over 2024–28.
Term life is the third largest life insurance line of business, which is expected to account for a 4.4% share of DWP in 2024. In 2023, term life insurance premiums grew by 5% as compared to 5.1% growth in 2022 and 8.7% growth in 2021, due to changes in consumer spending habits with rise in inflation rates.
To address this issue, insurers in Malaysia are providing low-cost and affordable protection plans to their customers under the i-Lindung program. It 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 and takaful operators (ITOs). i-Lindung Phase 2 was launched by the EPF in February 2024 to provide extended coverage that exceeds one year.
In August 2024, the i-MULA 50 Starter Pack Insurance Fund program was also launched by the Life Insurance Association of Malaysia, with the aim of providing 100,000 eligible Malaysians with more affordable and easily accessible life insurance. Term life insurance is expected to grow at a CAGR of 4.9% during 2024-28.
Other life insurance products are expected to account for the remaining 10.8% share of DWP in 2024.
Vangari concludes: “Favorable regulatory reforms will help in increasing the life insurance penetration rate in Malaysia (3.3%), which was lower as compared to other Asian markets such as Taiwan (9.3%), Japan (6.3%), and Thailand (3.5%) in 2023. Changing demographics and digitalization will prompt insurers to provide more competitive and tailored insurance policies that will help in improving the penetration rate.”
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