The latest market snapshot from Global Data FYI;
Malaysia’s general insurance industry is forecast to grow at a compound annual growth rate (CAGR) of 7.8% from MYR22.6 billion ($5 billion) in 2024 to MYR30.5 billion ($6.8 billion) in 2028, in terms of direct written premiums (DWP), according to GlobalData, a leading data and analytics company.
According to GlobalData’s Insurance Database, the general insurance industry in Malaysia is expected to rebound in 2024 and grow by 8.3%, after slowing to 7.5% in 2023, driven by an increase in premium rates across general insurance lines due to high inflation and higher claims that have escalated the costs for insurers.
Prasanth Katam, Insurance Analyst at GlobalData, comments: “Malaysia’s economy is expected to rebound in 2024 and grow by 4.4% as compared to a slower growth of 3.7% in 2023, which will support the growth of general insurance. The heightened demand for natural catastrophe (nat-cat) insurance policies due to an increase in the frequency of extreme weather events and rising vehicle sales is also expected to contribute to the growth of the general insurance industry.”
Motor insurance is the leading line of business in Malaysia’s general insurance industry and is expected to account for 46.9% share of the premiums in 2024. Motor insurance is projected to grow by 8.8% in 2024, supported by an increase in vehicle sales. According to the Malaysian Automotive Association (MAA), new vehicle registrations rose by 6.6% in H12024, reaching 390,296 units as compared to 366,176 units during the same period in 2023.
Katam adds: “Rising claims over the last couple of years have put pressure on insurers’ profitability. The paid claims for motor insurance increased by 15% in 2023 after increasing by 22% in 2022. Inflationary cost pressures on vehicle spare parts and an increase in road accident rates have contributed to this trend.”
As per the Traffic Investigation and Enforcement Department in Malaysia, traffic accident cases increased by 9.7% to 598,635 cases in 2023 from 545,588 cases in 2022. Furthermore, the number of fatalities increased by 104% to 2,417 fatalities in 2023 from 1,183 fatalities in 2022. To address these challenges, insurers will reassess their risk exposure, which is expected to increase the premium rates and support motor insurance growth. Motor insurance is expected to grow at a CAGR of 7.5% from 2024-28.
Property insurance is the second largest line of business that is expected to account for 26.4% share of premiums in 2024. Property insurance is projected to grow by 11.3% in 2024, driven by an uptick in demand for residential and commercial properties.
As per the National Property Information Centre (NAPIC), the Malaysian property market witnessed a significant surge in 2023, demonstrating substantial growth as compared to the previous year. Notably, property transactions increased in both volume and value by 2.5% and 9.9%, respectively, in 2023 as compared to the previous year.
Katam continues: “Furthermore, the country’s heightened exposure to natural disasters in recent years, particularly floods, has significantly raised consumer awareness of property insurance. According to the Persatuan Insurans Am Malaysia (PIAM), the increase in torrential rains across various states in Malaysia has spurred demand for fire insurance policies with flood coverage. This trend is expected to elevate premium rates in 2024 and bolster the growth of property insurance. Property insurance is expected to grow at a CAGR of 9.9% over 2024-28.”
PA&H insurance is the third-largest line of business that is expected to account for 10.1% share of premiums in 2024. PA&H insurance is expected to grow by 0.3% in 2024 after declining by 5.4% in 2023, driven by increased health awareness and escalating medical costs, which are expected to spur greater demand for health insurance policies.
A resurgence in the tourism sector will also positively impact the travel insurance segment, supporting PA&H insurance growth. PA&H insurance is expected to grow at a CAGR of 3.1% from 2024 to 2028.
Marine Aviation and Transit (MAT), liability, financial and other general insurance lines are collectively expected to account for 16.6% share of the DWP in 2024.
Katam concludes: “With a favorable economic environment and increased insurance awareness, the general insurance industry in Malaysia presents a positive outlook over the next five years. However, increasing claim costs due to rising inflation and escalating losses due to frequent nat-cat events will remain a significant challenge for general insurers.”
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