Malaysia’s non-life insurance sector sees stable outlook

AM Best also expects insurers to maintain robust underwriting profits.

Malaysia’s non-life insurance sector is expected to maintain a stable outlook supported by expected premium growth, regulatory reforms, and underwriting discipline, AM Best said. 

However, the segment remains exposed to climate-related risks, which could affect underwriting performance.

Gross premiums in Malaysia’s non-life segment grew in 2023, driven by motor and fire insurance, though at a slower pace than in 2022 due to moderating economic growth and tighter monetary policy. 

Malaysia’s GDP growth slowed to 3.7% in 2023, down from 8.7% in 2022. 

Nonetheless, economic recovery and increased insurance penetration, spurred by rate hikes and demand for digital and takaful products, are expected to support growth in the sector.

Regulatory measures by Bank Negara Malaysia (BNM) aim to boost insurance penetration, which remains low in the non-life segment. 

Key initiatives under the Financial Sector Blueprint 2022-2026 and Financial Inclusion Framework 2023 to 2026 include a target insurance/takaful penetration rate of 4.8% to 5% by 2026 and doubling microinsurance/microtakaful coverage. 

The licensing of digital insurance and takaful operators (DITOs), introduced in July 2024, is expected to improve market access and address protection gaps. 

Additionally, BNM’s Value-based Intermediation for Takaful Framework has supported sustained growth in general takaful contributions.

AM Best also expects insurers to maintain robust underwriting profits by adhering to disciplined pricing and underwriting practices. However, the sector faces increasing climate-related risks, with severe weather events impacting underwriting results, particularly in the fire insurance segment.