It is not easy to do a start-ups and was much easier this way," he added, noting that there is room for mergers and acquisitions; this is further driven by the liberalisation by Bank Negara Malaysia to allow for higher shareholding among foreign players. PIAM foresees foreign ownership among insurance players to be higher among the insurance players moving forward. Bank Negara has eased its restrictions to allow foreign (insurance players) investors to own stakes from 49% to 70%.
Chua said the consolidations are likely to take place among its 22 licensed direct insurance companies. Presently, PIAM has 28 member companies consisting of all licensed direct insurance and reinsurance companies for general insurance in Malaysia (PIAM started out with members from 56 companies).
PIAM has revised downwards its forecast growth for 2015 from 5.5% and 6.5% to a much lower 3% and 4%, due to challenging business headwinds and the weakening of the ringgit. For January to June 2015, the general insurance industry grew by 2.3% to RM9.07 billion in gross written premiums compared to 6.4% for the same period for the previous year.
The association attributed the lower growth rate to a challenging business and operating environment. Motor insurance registered a much slower growth rate of 2.1% for the half year compared to 8.3% for the same period last year.
Fire insurance, the second largest class, saw a higher growth rate of 5% compared to 4.2% last year, it added. The other strong performing lines include Marine, Aviation and transit (MAT) and Personal Accident with growth rates of 6.1% and 7.4% respectively surpassing 2014 growth of 0.4% and 4%, it noted.
On the financial performance, the industry turned in a higher underwriting profit of RM754 million compared to RM637 million for the same period last year, with industry loss ratio improving to 56.7% from 58.4% during the first half of 2014.
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