Malaysian Insurance Industry 2013

Malaysian analysts has projected a high single-digit growth in premium income for the insurance industry next year. The growth would be supported by the growing affluence amongst the middle-income population, healthy consumer spending power and an under-penetrated market, compared to that of a developed nation.

In addition, innovative products through channels like bancassurance and agencies have enhanced the profits from life insurance. Industry's growth will continue to outpace the gross domestic product growth as the government has pledged to increase insurance protection of the low-income household segment.

Asian region countries are facing pressure to elevate their respective minimum wage and should Malaysia follow this trend, it should be able to channel more disposable income to purchases of insurance policies.

Takaful segment is expected to continue registering a high double-digit growth of around 20 per cent through 2014. Insurers increasingly identified takaful as a high-growth profitable segment and with a penetration rate of 13 per cent for family takaful, it indicates the latent potential for takaful versus conventional life insurance's 55 per cent.

It added the takaful industry is still at an early stage of development with growth expected to outpace the growth of conventional insurance. The growth is expected to be supported by the increasing awareness to diversify takaful from being a niche segment catering to Muslim communities, enhanced regulatory reforms to support takaful infrastructure and identifying common grounds or workable solutions for issues faced by Shariah committees and industry leaders.

Factors such as stronger participation and liquidity in sukuk and Shariah-compliant instruments to support investment income and strengthening takaful and retakaful capacity will enhance takaful growth.