In terms of bottom line, the sector sees strong underwriting results.
COVID-19 has mostly affected Malaysian insurers’ top lines, particularly those closely linked to GDP growth and exports such as motor or trade and marine insurance, according to Malaysian Re’s Malaysian Insurance Highlights 2020 report.
Fixed income returns have declined and will remain low, which is a concern to insurers used to subsidise low underwriting results with investment returns.
In terms of bottom line, the sector expects strong underwriting results as most insurers experienced a solid improvement of their loss ratio during the implementation of the movement control order, in particular in motor, travel and medical insurance, as policyholders feared to visit general practitioners during the pandemic.
Despite the effect on top line and investments, the sector remains optimistic as risk awareness and management improved in light of policy wording and tightened exposures. Insurers were also able to stress test their capital models and their business continuity planning, hastening investments into technology and digitisation.
In terms of consumers’ awareness and demand, the majority of Malaysian insurers expect no lasting effect from COVID-19. Whilst the virus caused heightened awareness, insurers are sceptical that consumers’ memory of the benefits of insurance will outlast the pandemic, mostly because the pandemic is not perceived as an event directly associated with insurance.
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