Insurance, Takaful Profitability Declines To Rm4.6 Bln In 2h 2025 — BNM
KUALA LUMPUR, March 31 (Bernama) -- Profitability of Malaysia’s insurance and takaful sector declined slightly to RM4.6 billion in the second half of 2025 (2H 2025) from RM4.8 billion in the first half of 2025 (1H 2025), despite improved equity investment performance, said Bank Negara Malaysia (BNM).
The central bank said in its Financial Stability Review for 2H 2025, released today, that higher net unrealised gains from the recovery in the equity market were more than offset by a sharper increase in net underwriting losses, which rose to RM3.6 billion in 2H 2025 from RM0.9 billion in 1H 2025.
BNM said the increase in net underwriting losses was partly driven by seasonal factors, including lower premiums following the renewal of group policies, which typically occur in 1H 2025.
“Additionally, premium income continued to be affected by interim measures implemented by the insurance and takaful industry to assist individuals impacted by premium revisions to their medical and health insurance and takaful (MHIT) policies/certificates,” said BNM.
Net underwriting losses were further compounded by higher medical payouts, which rose to RM6.5 billion in 2H 2025 from RM5.7 billion in the preceding half, due to a rise in hospital admissions.
“Compared to the earlier half of 2025, hospital admissions rose across both individual and group medical policies following a spike in respiratory diseases such as influenza.
“A higher incidence of serious medical conditions and surgical procedures also contributed to the overall increase in medical utilisation,” it said.
The central bank further said new business premiums in the second half of 2025 grew by 1.6 per cent year-on-year, compared with 4.6 per cent in 2H 2024 and 6.8 per cent in 2H 2023.
It said the slower growth was attributed to weaker expansion in new business premiums for investment-linked (IL) products.
“Sales of IL products, Medical and Health Insurance and Takaful (MHIT) riders continued to be weighed down by adverse sentiments surrounding it.
“Interest in IL products also declined, reflecting weaker appetite for investments amid financial market uncertainties and competition from alternative savings products,” BNM said.
However, despite these pressures, overall new business premiums remained supported by steady contributions from the non-participating life insurance and ordinary family takaful segments.
As part of the ongoing RESET Strategy aimed at tackling medical inflation and enhancing the healthcare system in Malaysia, BNM collaborated with the Ministry of Finance, the Ministry of Health, and other stakeholders to release a White Paper on the Base MHIT Plan in January 2026.
“The White Paper sets out the design of a standardised and voluntary medical protection plan aimed at improving the affordability, transparency and long-term sustainability of private medical insurance and takaful coverage in Malaysia,” BNM said.
Implementation is expected to commence with a pilot phase in the second half of 2026, with a full market rollout targeted for early 2027.
BNM said operating profits of insurers and takaful operators (ITOs) in the general insurance and takaful sector remained stable at RM1.9 billion in 2H 2025, unchanged from 1H 2025.
“Despite softer bond investment performance, overall profitability was sustained by steady net underwriting income. The marginal increase in underwriting profits was primarily driven by the release of claims reserves, supported by higher third-party bodily injury claims settlements by general ITOs,” it said.
Meanwhile, BNM said that despite weaker profitability, the sector remains financially sound due to strong capital and liquidity positions.
“The aggregate capital adequacy ratio for the industry remained healthy at 225 per cent in 2H 2025, up from 223 per cent in June 2025, and well above the regulatory minimum of 130 per cent.
“Accordingly, aggregate capital buffers in excess of regulatory requirements remained sound at RM43.8 billion, compared with RM41.8 billion in June 2025,” BNM said.
— BERNAMA