E-Kasih Family Insurance Scheme

The government has agreed to prepare the Malaysian Family Insurance Scheme to provide social protection to the 268,000 families in the poor and hardcore poor categories. Heads of households registered in the eKasih system would get the insurance coverage, with a premium of RM50 a year, and involved a cost of RM13.4 million.

eKasih - In the event the head of household dies, the family will get RM10,000, permanent disability (RM10,000) and death due to accident (RM20,000). Pru-Takaful BSN, through its corporate social responsibility (CSR) since 2018, has provided free insurance coverage of RM30,000 for heads of households registered through eKasih.

Ping An Insurance Profit Fall 2021

Ping An Insurance Group Co of China Ltd., the country’s largest insurer, reported its biggest annual profit fall since 2008 as the country’s property market soured, but said it expected such investment losses to ease in future.

Ping An said net profit fell 29% to 101.6 billion yuan ($16 billion) in 2021, down from 143.1 billion yuan the previous year, as it recorded impairment losses totaling 43.2 billion yuan linked to investments in troubled China Fortune Land Development.

Property - The insurance group has been shaken in recent quarters by growing concerns about its investments in the highly indebted property sector, which has been hit by a string of developer defaults, credit rating downgrades and slump in shares and bonds.

Ping An’s property investments, as of end December, stood at 216 billion yuan, or 5.5% of its total insurance investment assets.

Ping An said it had a total exposure of 54 billion yuan to China Fortune last year. Some analysts cautioned that the total property exposure of Ping An is much higher and still underestimated by the market.

Premium income - from life insurance fell 4.1% year-on-year to 490.3 billion yuan, while property and casualty insurance premium income fell 5.5% to 270 billion yuan.

Ping An said in a filing that, besides the pandemic, another factor for drop in premium income was a fall in the number of Ping An sales agents, which also resulted in new business value of life and health insurance falling 23.6% to 37.9 billion yuan. 

Its army of insurance agents, once the jewel in Ping An’s crown, is set to shrink further, putting more pressure on sales.

Malaysia Life Insurance - 2021

Malaysia Life Insurance recorded an overall stronger performance with a double-digit growth of 12.4 per cent in its new business total premiums in 2021 compared to 2020. For the financial year ended December 2021 (FY21), the industry recorded RM12.8 billion in new business total premiums from RM11.4 billion in 2020. The stronger performance reflected the increase in awareness among the consumers on the importance of life insurance protection amid the Covid-19 pandemic.

The industry recorded a healthier performance, driven by the strong rebound of investment-linked policies which rose 31.2 per cent to reach RM6.6 billion in 2021, despite the challenging business environment due to the pandemic.

Group policies recorded a moderate growth of 7.7 per cent in new business total premiums to RM4.1 billion in 2021. Traditional policies charted a decline of 17.3 per cent during the year.

Overall new business sum assured increased to RM461.1 billion, registering a modest growth of 5.4 per cent from RM437.2 billion in 2020.

New business sum assured of investment- linked policies recorded a strong increase of 14.4 per cent from RM107.7 billion to RM123.2 billion in 2021, while group policies recorded an increase of 2.8 per cent and traditional policies, a slight dip of one per cent.

New policies issued in 2021 - recorded a strong growth of 53.5 per cent from 1.2 million policies in 2020 to 1.9 million policies in 2021. This was mainly due to traditional policies which charted a huge increase of 99.7 per cent to reach 1.2 million policies in 2021.

AJB Bumiputera Liquidity

The Ministry of Finance has highlighted the need for insurance supervisors and relevant stakeholders to take quick steps to resolve long-standing liquidity problems at the life insurance mutual, AJB Bumiputera 1912 (AJBB). If solutions cannot be found soon, the insurer's assets and the rights of policyholders will potentially be further eroded and the new funding for the insurer will be hampered.

Demutualization - AJBB's capital problem could be settled through demutualization. However, the demutualization option creates new issues, including the potential for low share ownership and a fall in the value of protection benefits for policyholders.

Demutualization option is challenging considering the stages and requirements that need to be met and whether there are still investors who will enter and inject capital. In addition, it is also necessary to ascertain whether the impact on the dilution of ownership and benefits to post-demutualization policyholders can be accepted by all parties.

Alternative solutions - Other options for the insurance mutual to improve its solvency level, include generating premium income from new policies, distributing losses to policyholders and existing members, improving reinsurance arrangements, or issuing surplus notes.

However, for AJBB, the first two options are considered quite difficult to adopt because of the insurer's financial condition and performance which continue to decline. Meanwhile, another option is to issue surplus notes. However, this is not easy to carry out, considering that it is relatively new and there is no related regulatory framework in Indonesia yet.

AJBB, with more than 6m policyholders most of whom are government employees, has been restructuring under the stewardship of Indonesia’s Financial Services Authority (OJK) since 2013. The insurer has also attempted to find a strategic investor, a move which is also unsuccessful so far.