Bank Negara Malaysia, the country’s central bank, has reportedly moved the timeframe for fire insurance detariffication to next year. The regulator met with insurers and decided that the sector needed more time before the undertaking. BNM, according to the source, is reviewing the practicality of liberalising the fire insurance market.Meanwhile, a senior insurance executive said: “the expectation was that it was supposed to be done this year, but now, the timeline has been moved to next year at the earliest.” He also noted that growth in fire insurance has been muted in recent years, because it is tied to loans growth.
According to the report, BNM’s review seeks to assess whether consumers and insurers are ready for further liberalisation of the fire insurance market.
Fire insurance margins are quite big here. Any price regulation from here could suppress the margins for that sector. Recall that the detariffication process was proposed in 2017. The first phase that was undertaken was for motor insurance. It is fire insurance next. Margins for general insurers have narrowed following the detariffication of motor insurance and some margin compression is expected for fire insurance.
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