Insurance companies can expect healthy demand from the 20 to 40-year-old crowd in Malaysia as 60% of this group are planning to buy life or health insurance products in the next 12 months, according to a survey by Swiss Re Ltd.
In the study covering 13,800 people in 11 major Asia-Pacific cities, Swiss Re found that 20 to 40-year-old Malaysians are more worried about medical bills, with 60% concerned about getting a serious illness and 57% the inability to pay for long-term medical expenses.
They also tend to underestimate their life expectancy by 15 years when comparing their self-perceived average life expectancy to the official average life expectancy of 75 years old.
The perception gap was the largest in the Asia-Pacific, suggesting a significant longevity risk.
“This large perception gap should ring an alarm bell, as underestimating life expectancy can be a risk in the sense that people may not plan sufficiently to meet their financial needs after retirement,” said Swiss Re Malaysia head and director of reinsurance client markets, Eric Gan.
The study showed that 61% of respondents in Malaysia are concerned about the amount they have to pay for medical expenses relating to major illness, while 62% are concerned that their medical or health insurance premium will increase beyond their affordability in the future.
Gan added that “both the public and private sectors must act together to ensure that living longer remains a benefit to society, rather than a financial burden.
“In particular, the insurance industry can play a key role in raising public awareness of longevity risks and the importance of personal financial planning at an early age, as well as in offering suitable products and services for tackling the challenge”.
Most Malaysians also prefer to buy insurance through insurance agents (81%) and banks (31%) as financial soundness, reputation and value for money are ranked most important when considering an insurance company.
In addition to that, the study noted that only a small portion of Muslim respondents in Malaysia and Indonesia have bought Islamic insurance products.
The study said that “an overwhelming majority of the respondents either do not know or have limited knowledge of (Islamic insurance) products”, indicating consumer education is clearly needed.
The survey also found that the Malaysian group is generally more risk averse compared to their Asia-Pacific counterparts, including Singapore.
Gan said: “Compared to their Asia-Pacific peers, Malaysia's 20 to 40 year olds are less willing to take risks on their health and career, and more willing to take risks on their lifestyle.”
The survey titled Swiss Re Survey of Risk Appetite and Insurance: Asia-Pacific 2011.
It was conducted in April and May in Australia, Singapore, South Korea, Taiwan, China, India, Indonesia, Vietnam and Malaysia.
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