Oil and gas drive Malaysia’s non-life insurance demand

Malaysia’s insurance sector operates under a developed regulatory framework.

Malaysia’s insurance market is moderately sophisticated, offering diverse products in both life and non-life segments, according to Fitch Ratings. 

The life insurance sector is dominated by whole-life, endowment, and term products, with investment-linked policies gaining traction. 

The non-life sector benefits from demand in domestic industries, particularly oil and gas, supporting commercial insurance lines.

Malaysia’s insurance sector operates under a developed regulatory framework overseen by Bank Negara Malaysia (BNM), the country’s central bank. Insurers are governed by the Financial Services Act and adhere to a risk-based capital regime introduced in 2009. 

In June 2024, BNM released an exposure draft proposing updates to the risk-based capital framework for insurers and takaful operators. 

The draft aims to align the framework with global capital standards, such as the Insurance Capital Standard (ICS) set by the International Association of Insurance Supervisors. 

Additionally, BNM monitors insurers’ internal capital adequacy assessment processes (ICAAP) to ensure regular evaluations of capital adequacy and the establishment of effective risk-management measures. 

The regulator also oversees capital distribution and is empowered to act in insolvency situations.