Malaysia’s Non-life Insurance Sector Remains Stable Despite Climate Risks - AM Best
KUALA LUMPUR, Dec 18 (Bernama) -- Global credit rating agency, AM Best has maintained a stable outlook on Malaysia’s non-life insurance segment, citing sustained underwriting and pricing discipline.
In a statement, AM Best said the stable outlook was also driven by expected premium growth backed by regulatory reforms designed to increase insurance penetration.
The Best’s “Market Segment Outlook: Malaysia Non-Life Insurance” report states that the non-life sector is poised for significant growth, underpinned by economic recovery, rate hikes due to high inflation and rising claims, as well as growing demand for digital insurance and takaful products.
Malaysia’s central bank and lead regulator have implemented various initiatives to improve non-life insurance penetration, which remains in the low single digits. By 2026, the goal is to achieve an insurance/takaful penetration rate of 4.8 to 5.0 per cent alongside doubling microinsurance/microtakaful coverage.
Additionally, growth in general takaful contributions has consistently outpaced that of conventional insurance in recent years, a trend expected to continue over the medium term.
At the same time, Malaysia’s non-life insurers face rising climate-related risks, with more frequent severe weather events affecting underwriting performance.
AM Best director, head of analytics, Victoria Ohorodnyk indicates that, while recent premium rate increases following significant flooding in 2021 have provided some relief, the sector remains vulnerable to the ongoing volatility from climate risks, especially in fire-related insurance.
Meanwhile, the continued de-tariffication of motor and fire insurance is expected to increase pressure on pricing over the near to medium term while strengthening the industry’s long-term sustainability, as well as drive product innovation.
-- BERNAMA