MALAYSIA NON-LIFE INSURERS MAINTAIN UNDERWRITING DISCIPLINE AMID MARKET CHALLENGES - AM BEST REPORT

KUALA LUMPUR, March 30 (Bernama) -- Although Malaysia’s non-life insurance industry is likely to have contracted in 2020 amid the COVID-19-fuelled economic disruptions, the health and medical insurance segment is experiencing growth driven by greater demand. 

According to a new AM Best report, the Southeast Asia country’s non-life insurers have reported good overall profitability and maintained solid solvency positions.

In its Best’s Market Segment Report, ‘Malaysia Non-Life Insurers Maintain Underwriting Discipline Amid Market Challenges’, AM Best states that industry’s gross premiums are expected to have fallen by more than one per cent in 2020, according to a statement.

In fact, during the first six months of 2020, premiums dropped by approximately 3.5 per cent compared with the same prior-year period, with motor insurance having experienced the steepest fall, by more than seven per cent, due to stalled new vehicle production and a slowdown in automobile sales during the pandemic environment.

Similar to trends observed in many other Southeast Asia markets, the pandemic has raised awareness for health and medical insurance; consequently, premiums grew by approximately three per cent in first-half 2020, compared with the same period in the previous year.

According to the report, Malaysia’s non-life segment is underpinned by robust capital adequacy, as well as a track record of consistent underwriting profitability, despite increased competition arising from the phased liberalisation in recent years of the country’s largest non-life product lines: motor and fire insurance.

Although the non-life insurance penetration rate in the country — 1.4 per cent in 2019 — lagged behind that of Thailand and Singapore, it is higher than most of its emerging Southeast Asia peers.

AM Best is of the opinion that the government’s phased liberalisation, coupled with the disruption borne by COVID-19, has helped to accelerate the digital transformation of Malaysia’s non-life insurance segment.

Although Malaysia’s non-life companies have remained resilient while grappling with the impact of the ongoing pandemic and other market challenges, AM Best expects a gradual thinning of underwriting and operating performance margins over the medium term. 

More details at www.ambest.com.

-- BERNAMA