The downturn is most evident in the motor insurance business.
The Malaysian general insurance sector will contract 2.2% this year owing to feeble consumer demand and suspension of economic activity, a GlobalData report revealed.
Per the latest data, the sector’s CAGR over 2019 to 2024 was revised from 4.9% to 2.4%.
“The Malaysian economy is projected to contract by 4.9% in 2020, which will adversely impact consumer spending. The recent floods in the country will further dampen economic growth, resulting in lower premiums for general insurers,” said analyst Sangharsan Biswas.
The slowdown is most evident in the motor insurance business, which accounted for 48.3% of the total general insurance premium in 2019. According to the Malaysian Automotive Association (MAA), new vehicle sales registered a 41.1% plunge from January to June due to lockdown restrictions and stalled production.
The uncertainty will affect new premium collections for motor insurers despite government efforts to boost automotive sales through tax exemptions, the report said.
A similar scenario can be seen amongst the already-stagnant property insurers. As per National Property Information Centre (NAPIC), property sales by value recorded a 31.5% drop in H1 due to decline in construction activity and negative sentiment for purchasing residential property.
The Bank Negara Malaysia (BNM) has introduced measures such as detariffication of fire and motor insurance business lines and is also promoting digitisation for enhanced client interaction and operational practices of insurers, in order to boost the potential of the country’s insurers.
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