Malaysia’s life insurance industry, traditionally dominated by agency business, is set to see “rapid changes” once the country brings wide-ranging regulatory measures. The insurance regulator Bank Negara Malaysia (BNM) is currently finalising reforms to insurance regulations which including increased oversight of third party agents selling life insurance.
Those who do not have long-term commitment in the industry will be squeezed out, as regulatory changes will make it tough for part-time insurance agents to survive. Those who survive will become professionals and eventually start to form their own companies.
Malaysia's life sector - A report by consultancy firm Fast Market Research published last year, found that agencies and bancassurance collectively accounted for 89.6% of the life insurer's new business written premium in 2015, while brokers accounted for the remaining 10.4%. Malaysia life sector is highly concentrated, 10 companies, including Zurich Malaysia, accounting for 77.5% of the segment's gross written premium in 2015.
There is currently a freeze on the issue of new insurance licences by BNM, although BNM has hinted it may be open to consider applications on a case by case basis.
Product pricing - As part of the reforms, BNM will also remove set tariffs for life insurance products. Under the new regime, set to be implemented in phases starting later this year, policy pricing will be based on risk analysis, including personalized driver and vehicle profiling, rather than set by the regulator.
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