Adequate capital has supported industry profitability, analysts say.
Malaysian non-life insurers have managed to maintain underwriting discipline despite the pandemic, recording good profitability supported by strong capital adequacy, according to an AM Best report.
The segment has seen modest growth in recent years with a five-year CAGR of 2% in gross written premiums from 2015 to 2019. The penetration rate is higher than its emerging Southeast Asian peers, but lower than those of Thailand and Singapore.
An established risk-based capital (RBC) regulatory framework and robust oversight from the Bank Negara Malaysia also supports the sector. Moreover, many domestic insurers either partner with international peers or large local financial institutions through their shareholding structure, resulting in a more mature industry.
Nonetheless, COVID-19 definitely hit premiums in 2020, declining 3.5% in the first six months of that year compared to 2019. Motor business saw the largest plunge at 7% due to halts in new vehicle production and lower automobile sales, as did travel insurance which was triggered by hampered regional and global travel.
Marine, aviation and transit (MAT) insurance observed a more modest 1% decline in premiums brought about by disruptions in the global supply chain, manufacturing sector and transport.
On the other hand, health and medical insurance premiums inched up 3% during the first six months of 2020 due to higher awareness caused by the pandemic.
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