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Creditor Insurance in Malaysia

  • March 2015
  • -
  • Finaccord
  • -
  • 25 pages

Finaccord’s report titled Creditor Insurance in Malaysia offers uniquely detailed insights into the market for creditor insurance, sometimes also referred to as payment protection insurance or loan-related insurance, as acquired by individual borrowers in Malaysia. Drawing on the results of a survey of 50 lending institutions, the study analyses the distribution of creditor insurance by banks and other lending institutions, how provision rates vary for different lending products, operating models used for arranging creditor insurance, and distribution partnerships weighted by the size of distributors. The PartnerBASE™ dataset that accompanies the report details all creditor insurance distribution deals traced by Finaccord. In short, this study will provide you with the definitive guide to current and future opportunities in creditor insurance in Malaysia.

Table Of Contents

Creditor Insurance in Malaysia
0.0 EXECUTIVE SUMMARY 1
1.0 INTRODUCTION 3
What is this report about? 3
This report provides a comprehensive analysis of loan-related insurance policies in Malaysia 3
Rationale 3
The report tracks 75 separate initiatives for marketing creditor insurance through lending institutions 3
Methodology 3
Survey of banks and other lending institutions 3
Market data 4
Definitions 5
Creditor insurance 5
Mortgages, consumer finance and credit cards 5
Weighted provider share of partnerships 5
Operating models 6
Abbreviations and exchange rates 7
PartnerBASE and market data annexe 7
Finaccord 7
2.0 MARKET ANALYSIS 9
Banks and other lending institutions covered 9
Introduction to the banking sector 9
The top ten banks by number of retail customers are all indigenous Malaysian entities… 9
… and several are expanding elsewhere in south-east Asia 9
Foreign banks account for around 23% of the banking system's total assets… 10
… and Islamic banking entities for around 21% 10
Shariah-compliant takaful insurance is also a significant segment within the overall insurance market 10
Consumer lending market size and growth 11
Mortgage lending 11
Mortgage balances increased at a nominal compound annual rate of 13.3% between 2010 and 2014… 11
Non-mortgage lending 12
… with total non-mortgage consumer lending balances moving up at an equivalent rate of 6.6% 12
Credit and other pay later cards 13
The total number of credit cards in circulation has decreased slightly since 2010 13
Creditor insurance provision rates, operating models and partnerships 14
Creditor insurance linked to mortgages 14
All but two mortgage lenders offer related creditor insurance 14
Etiqa supplements distribution through Maybank with several other partnerships 14
Syarikat Takaful Malaysia has established ties in this arena with a total of six different banks… 15
… and Takaful Ikhlas with five 15
As for other insurance types, joint ventures are often used for mortgage-related creditor insurance 15
Manulife, Prudential and Tokio Marine are all used as external underwriters in this context 15
Creditor insurance linked to consumer finance 17
Over 30 arrangements are visible for creditor insurance linked to consumer finance… 17
… with many partnerships identical to those for mortgage-related creditor insurance… 17
…although the research also identifies a number of differences… 17
…and the existence of a few specialist consumer credit providers also creates diversity 17
Creditor insurance linked to credit cards 19
A few card issuers have introduced schemes for credit card payment protection insurance 19
Creditor insurance risk coverage 21
Most creditor insurance products in Malaysia are configured as loan-related life insurance policies 21
Alternative distribution channels 22
There is little evidence for the development of alternative distribution channels for creditor insurance 22
Creditor insurance market size, growth and forecast 22
The creditor insurance market is likely to have expanded quite rapidly in recent years… 22
. and the outlook to 2018 is also positive 22
The introduction of policies covering temporary incapacity or unemployment could spur higher growth 23

LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY 1
1.0 INTRODUCTION 3
Banks and other lending institutions in Malaysia contacted by Finaccord, segmented by type 4
2.0 MARKET ANALYSIS 9
Residential mortgage lending balances outstanding in Malaysia (absolute and per capita), 2010 to 201411
Consumer non-mortgage lending balances outstanding in Malaysia (absolute and per capita), 2010 to 2014 12
Credit and other pay later cards issued and per capita in Malaysia, 2010 to 2014 13
Key data points for the consumer lending market in Malaysia, 2010 to 2014 14
Provision of creditor insurance linked to mortgages in Malaysia, 2015: provision rate, operating models and weighted provider share of partnerships 16
Provision of creditor insurance linked to consumer finance in Malaysia, 2015: provision rate, operating models and weighted provider share of partnerships 18
Provision of creditor insurance linked to credit cards in Malaysia, 2015: provision rate, operating models and weighted provider share of partnerships 20
Risk coverage of creditor insurance policies in Malaysia, segmented by type of underlying product, 2015 21
Creditor insurance gross written premiums in Malaysia, segmented by policy type, 2010, 2014 and 2018 23
Creditor insurance gross written premiums in Malaysia, segmented by cover type, 2010, 2014 and 2018 24
Creditor insurance gross written premiums in Malaysia, segmented by policy and cover type, 2010, 2014 and 2018 25

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