Malaysia insurers must confront catastrophe risk spike for 2026 report

Over one-third of respondent identified extreme weather events as their top risk.

Natural catastrophes have emerged as the primary concern for businesses in Malaysia for 2026 that insurers need to be on the lookout for, according to the latest Allianz Risk Barometer.

Over one-third of respondents, or 38%, identified extreme weather events as their top risk, a significant rise from its fifth-place ranking the previous year.

This shift follows severe flooding in late 2025 that affected over 15,000 people across seven states and caused approximately $10.3m in losses, primarily impacting paddy crops.

Artificial Intelligence (AI) and business interruption are tied as the second-highest risks in the country, each cited by 30% of survey participants. 

AI is a new entry to the top of the list, with businesses expressing concern over implementation challenges, liability exposures, and misinformation. 

Meanwhile, business interruption risks remain high due to potential supply chain disruptions, a trend that mirrors concerns across the broader Asia-Pacific region.

Other notable insurance-related threats include changes in legislation, climate change, and cyber incidents, which all tied for the fourth position with a 27% response rate. 

Whilst cyber incidents remained steady in their local ranking, there has been an alarming rise in online fraud and scams, with recorded losses in Malaysia reaching ~$479.8m (RM1.919b) as of September 2025.

Additionally, Malaysia Airports Holdings Berhad was targeted by a $10m ransomware demand in March 2025. The findings highlight a divergence between Malaysian concerns and global trends. 

Whilst natural catastrophes are the leading issue in Malaysia, cyber incidents remain the top risk globally for the fifth consecutive year. 

Allianz representatives suggest that the increasing frequency of weather events previously considered rare now requires more robust risk management and climate adaptation strategies to protect commercial assets.