According to analytics company GlobalData, the growth in the Malaysian general insurance industry will be supported by the increase in automobile sales as well as strong performance in property insurance driven by the expansion of construction activities in the country.
Rakesh Raj, Senor Insurance Analyst at GlobalData, commented: “The Malaysian general insurance industry registered a growth of 2.4 per cent in 2021 after declining in 2019 and 2020. The growth in the industry is predominantly driven by the economic recovery, which after declining by 5.6 per cent in 2020, is expected to grow by 5.5 per cent in 2022.”
Motor insurance was the largest general insurance line, accounting for 46.5 per cent of the total direct written premiums (DWP) in 2021. After declining by two per cent in 2021 due to Covid-19 lockdown restrictions and global automobile chip shortage, the motor insurance segment is expected to grow by 1.9 per cent in 2022, driven by an increase in vehicle sales. Motor insurance is expected to grow at a CAGR of three per cent during 2021-26.
Personal accident and health insurance third-largest line
Property insurance, which was the second-largest general insurance line with a 25.4-per-cent share, grew by 12.4 per cent in 2021, driven by increased construction activity. According to the Malaysian Ministry of Finance, the construction sector is expected to grow by 11.5 per cent in 2022, driven by the strong pipeline of infrastructure, residential, and utility projects. As a result, property insurance is expected to grow at a CAGR of 7.9 per cent during 2021-26.
Personal accident and health insurance was the third-largest line, accounting for 11.1 per cent of general insurance DWP in 2021. The Malaysian healthcare system is predominantly based on public health insurance where private health insurance is mostly sold as an add-on service.
Raj continued: “However, with rising medical costs, increased health awareness, and a gap in public healthcare coverage, the popularity of private insurance is increasing among the citizens. PA&H insurance is expected to grow at a CAGR of 4.5 per cent during 2021-26.”
Marine, aviation, and transit, Liability, and Miscellaneous insurance accounted for the remaining 16.9 per cent share in 2021.
Raj concluded: “Malaysia’s general insurance penetration, as a percentage of GDP, in 2021 was 1.2 per cent, which is slightly higher than the Asia-Pacific average of 1.1 per cent. Recovery in the economy, increasing vehicle sales and a strong pipeline of construction projects are expected to support the growth of the Malaysian general insurance industry over the next five years.”