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Overview of the General Insurance Industry in Malaysia

  • May 2014
  • -
  • Frost & Sullivan
  • -
  • 50 pages

Liberalization Drives Consolidation for the Industry

Key Findings

• The general insurance industry in Malaysia has sustained a robust growth trend, recording a compound annual growth rate (CAGR) of x % for 2009 to 2012. In 2012, the size of the market as measured by the gross direct premium was approximately RM x billion, having grown by x % from the previous year. The industry is expected to expand at a CAGR of x % from 2012 to 2018F.
• The strong growth of the medical and personal accident (PA) insurance segment is largely driven by a number of factors such as the rising middle class population, growing medical costs, rapid urbanisation, and GDP growth. The segment is also largely influenced by the increase in outbound travellers in Malaysia as well as the requirement under the Hospitalisation and Surgical Scheme for Foreign Workers (SPIKPA), which mandates all foreign workers to have medical insurance coverage effective from 1 January, 2011.
• The motor insurance segment continues to be a key one for the general insurance industry in Malaysia due to the growing number of vehicles in the country and the mandatory regulatory requirement for all vehicles to have insurance coverage. Prospects in the motor segment are expected to improve further with the expected lifting of the motor insurance tariff by 2016.
• Under the ETP, the Performance Management & Delivery Unit (PEMANDU) has identified eight strategic reform initiatives that are expected to boost the local economic growth, which, in turn, may spur trading activities and improve business sentiments in the country. Increasing business activities may also provide insurance opportunities for general insurance companies, especially in the Marine, Aviation and Transit (MAT) insurance segment.
• The growing number of property units in Malaysia provides an opportunity for general insurance companies to offer fire insurance coverage for property owners.

The Financial System Structure in Malaysia

• The financial system in Malaysia is regulated by Bank Negara Malaysia and the Ministry of Finance (MOF). Other governing bodies of the financial system include the
Securities Commission and the General Insurance Associate of Malaysia.
• Financial institutions in Malaysia are categorized under Banking Institutions and Non-Banking Financial Intermediaries.
• In Malaysia, the Securities Commission Malaysia (SC) is entrusted with the responsibility of regulating and systematically developing the capital markets. It reports to
the MOF. The SC’s ultimate responsibility is to protect the investors.
• Under the purview of the SC and the MOF, Bursa Malaysia operates a fully integrated exchange, offering a complete range of exchange-related services including trading,
clearing, settlement, and depository services.

Overview of the General Insurance Industry in Malaysia

The major categories of general insurance are MAT insurance, fire insurance, medical and PA insurance, and motor insurance. Other miscellaneous insurance schemes include, among others, bonds, liabilities, contractor’s all risk and engineering risk insurance, workmen’s compensation and employers’ liability insurance as well as other types of miscellaneous insurance not falling within any of the classifications mentioned.
• Marine, Aviation and Transit (MAT) insurance schemes include insurance coverage for the marine hull, aviation, cargo and offshore oil and gas
• Fire insurance schemes cover losses or damages to properties caused by fire, lightning, or explosion of domestic boiler or domestic gas cylinder not forming part of any gas work.
• Medical and Personal Accident (PA) insurance schemes provide coverage on the cost of medical treatment at private clinics or hospitals. PA schemes provide personal compensation in the event of injuries, disabilities, or death caused by accidental means. Additionally, PA schemes also include travel insurance, which provides coverage against travel-related accidents, losses, or interruption.
• Motor insurance provides financial protection against physical damage and/or bodily injury resulting from moving vehicle accidents and against liability that could result from it.
• Other miscellaneous insurance schemes include, among others, bonds, liabilities, contractor’s all risk and engineering risk insurance, workmen’s compensation and employers’ liability insurance.

Table Of Contents

Overview of the General Insurance Industry in Malaysia
Executive Summary 4
General Insurance Industry 6
Snapshot of Competitive Landscape 24
The Frost and Sullivan Story

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