The life insurance industry in 2013 provided a higher insurance protection to the public in aggregate, with 3.7 per cent higher claims amount, 14.2 per cent higher payout in maturity and cash surrender values and 6.7 per cent higher insurance coverage.
According to statistics from the Life Insurance Association of Malaysia (LIAM), claims paid in 2013 amounted to RM6.9 billion in various types of claims including death, disability, medical and cash bonuses, 3.7 per cent higher than the corresponding amount of RM6.7 billion a year earlier.
In addition, RM8.6 billion was paid in maturity amount and cash surrender values in 2013, 14.2 per cent higher than the corresponding figure of RM7.5 billion in 2012. The increase was mainly due to fluctuation in maturity payment which was dependent on the term of the policies.
“The life insurance industry in Malaysia remained stable with a small negative growth of 0.2 per cent in 2013, as measured by new business total premium (single premium plus annualised premium).
“The new business total premium in 2013 was RM8.19 billion, as compared to RM8.20 billion in 2012,” LIAM’s Vincent Kwo highlighted.
“Proactive measures should be taken by the insurers and the policy makers to increase insurance awareness and to encourage insurance purchase among the Malaysian population to reduce protection gap.
‘The result of our study are expected to spur the insurance industry to move forward in achieving the targeted penetration rate of 75 per cent by 2020 under the Economic Transformation Plan.”
As the government looks to enhance products by introducing regulatory measures such as the Financial Services Act 2013 and the Islamic Financial Services Act 2013 – both of which come into force this year – the times are definitely interesting for insurers.
The General Insurance Association of Malaysia (PIAM) believes market conditions will evolve to reflect broader-based competition and a principle-based regulatory regime which modernises the laws that govern the conduct and supervision of financial institutions.
“With the development of a comprehensive regulatory and supervisory framework for the insurance industry and a more competitive insurance market, another important structural adjustment that the regulator is looking at is the review of the existing costs controls that are applied to life and general insurers,” noted PIAM.
Its chairman Chua Seck Guan said: “It is important for insurers to challenge their mind set, consider the outlook for the global economy and make a commitment to develop further as the industry plays a robust role in Malaysia’s financial system, offering a wide spectrum of general and life insurance products to cater to a more knowledgeable and financially aware society.”
The industry is directing its efforts to ensuring a firm foundation for orderly transition into this new and challenging environment.
Towards this end, Malaysian laws will place insurance companies on a platform readied by Bank Negara Malaysia for advancing forward as sound, responsible and responsive insurance companies.
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