Insurers Urged To Consolidate

Insurance players are urged to consider consolidating to achieve competitive edge to lift performance, break into new markets and leverage from lowered barriers into innovation and competition.

Bank Negara Malaysia governor Datuk Nor Shamsiah Yunus said it is time for the Malaysian economy to undergo transformational change in the insurance sector rather than incremental ones.

"Insurance also plays a key role in the development and resilience of our financial markets. In the recent episodes of heightened market volatility, insurance and takaful companies, alongside banks, have had an important stabilising effect on markets.

"It is sobering to note that for Malaysia, insurance merely accounts for 1.7 per cent of GDP and only 5.8 per cent of financial assets. Clearly, there is significant, untapped potential for the industry to increase its broader economic impact, and feature much more prominently in Malaysia’s growth story.

"However, this cannot happen unless the industry steps up its game and takes a more strategic view of its role in the economy by working much more proactively across the industry and with relevant bodies and agencies. To achieve this, we believe there is room for further consolidation in the industry," she said during her opening speech at the 8th Malaysian Insurance Summit today.

Nor Shamsiah also highlighted the pressing issue of the role of the industry in supporting a sustainable and comprehensive healthcare system in Malaysia of which the health expenditure currently standing at 4.6 per cent of the GDP.

"The Malaysian medical and health insurance market has the highest average gross medical inflation. It was around 15.4 per cent in 2018 and is expected to continue rising.

"The industry plays a key role in helping contain costs and to align the consumers and medical industry towards preventive care measures which will reduce the burden of individuals in society, especially those less privileged.

"These demands on the industry are far from trivial and will not be met without strong leadership, a longer-term view on investments in capacity, and a relentless focus on quality standards and operational efficiency. Yet, today these conditions remain hampered by what is still a fragmented industry," she added.