Malaysia: New business premiums for life market up 3.8% y-o-y to MYR10.1 bln

| 15 Feb 2018

New business premiums in Malaysia's life sector grew by 3.8% in 2017 to MYR10.119 billion (US$2.584 billion), according to data released yesterday by the Life Insurance Association of Malaysia (LIAM).

In comparison, new business total premium grew by 6.9% in 2016 to MYR9.75 billion.

Based on New Business Annual Premium Equivalent (APE, measured by 10% of Single Premium and 100% Annualised Premium), the life insurance industry grew by 1.9% to MYR5.82 billion last year (2016: 16.2%). In terms of individual business, investment-linked business performed more favourably compared to traditional policies. Investment-linked business recorded an increase of 19.4% in 2017 to APE of MYR3.67 billion ( 2016: 16.4%) while traditional business recorded a negative growth of -22.0% to APE of MYR1.79 billion (2016: 20.0%). Group policies maintained a stable growth of 4.9% to APE of MYR365 million (2016: 4.8%).

Total in-force premiums in 2017 recorded a slight increase of 3.3% to MYR36.6 billion.

The life insurance industry provided insurance coverage amounting to MYR1.38 trillion in sum assured for all policies combined in 2017. This amount is 6.0% higher than the corresponding figure of MYR1.3 trillion in 2016.

LIAM says that the healthy performance of the life insurance industry reflects the continued increase in awareness among Malaysians of the importance of insurance protection. As a whole, the life insurance industry provided insurance protection to 12.6 million lives (counting lives with multiple policies as separate lives) in 2017, a marginal increase of 11.978 lives compared with year 2016.

The per capita sum assured also increased from MYR41,055 in 2016 to MYR42,992 in 2017. However, the per capita sum assured of MYR42,992 is still way below the amount needed to support one family member in the event of the death or disability of the breadwinner. Based on the 2012 Underinsurance Study in Malaysia undertaken by University Kebangsaan Malaysia and LIAM in 2013, the average mortality gap for each member of a family is about MYR100,000 to MYR150,000.

Claims

The life insurance industry registered an increase of 5.3% in claims amounting to MYR10.1 billion as compared to MYR9.7 billion in 2016. The growth in claims payments was contributed mainly by higher death and disability claims. The increase in healthcare costs is a major concern in the industry as companies try to keep the healthcare premium affordable for all. Efforts undertaken by the industry to manage the rising medical costs include working closely with various stakeholders to ensure that the healthcare premiums continue to be maintained at an affordable level, proposing to request that private hospitals on insurers’ panel to publish their charges on common surgeries and treatments, standardise their billing format to enhance the efficiency of keeping tabs on claims amounts and work with healthcare providers to ensure that medical treatments are charged at fair prices and treatments recommended are clinically indicated.

Outlook and initiatives

According to LIAM President, Mr Toi See Jong, the outlook and prospects of the life insurance sector remain positive as the percentage of population with life insurance or takaful plans is still low at 54%. Taking into account policyholders with two or more life or takaful policies, only 34 out of 100 people are insured.

In response to this challenge, Bank Negara Malaysia together with LIAM, the Malaysian Takaful Association and Persatuan Insurans Am Malaysia (PIAM) came up with a bold and noble initiative in November 2017 to launch an affordable insurance scheme “Perlindungan Tenang – Mampu & Mudah”. Riding on the three basic criteria of affordability, accessibility and simplicity, Perlindungan Tenang is sold by six life insurance companies.

In addition, in July 2017, significant developments were made to offer life insurance via online /Internet channels and direct walk-in. The introduction of easy, hassle-free distribution channels is to make life insurance purchase simple and quick. The life insurance industry also introduced a more comprehensive Customer Service Charter (CSC) in December 2017. Aimed at underscoring the insurers’ commitment to delivering a consistently high standard of customer service, the revised Charter has introduced certain minimum industry standards with regard to turnaround times for specified services. 

Effective January 2018, the Balanced Scorecard (BSC) for agents was introduced. Under the BSC framework, a proportion of agents remuneration will be dependent on a number of factors such as persistency, professionalism, advice given to customers, and good service, etc. This will be a major transformation to the life insurance experience for policyholders.

Never miss important industry news. Subscribe to get AgentsWIN delivered to your inbox for free.