General Insurance - Malaysia - Premium Growth 10%

General insurance industry has recorded an increase in gross direct premiums of 10 per cent to RM19.4 billion for 2022 compared to 2021. However, underwriting profit contracted by 23 per cent to RM1.56 billion mainly due to losses in both motor as well as medical and health insurance lines of business.

Motor Insurance Losses - General Insurance Association of Malaysia (PIAM) said motor portfolio reverted to a loss after two years of profit during the pandemic with a reported 58 per cent rise in the number of accidents as of September 2022 compared to the corresponding period in 2021. Motor insurance observed a nine per cent growth in gross direct premiums to RM9.0 billion in 2022, it recorded an underwriting loss of RM3 million with net claims incurred ratio deteriorating to 65.3 per cent reverting towards pre-pandemic levels.

Motor & Fire Insurance - The association said that motor and fire lines of business remained as the top premium contributors. Motor maintained its position as the largest business line with 46 per cent share of total premium.

Premium for fire in 2022 rose by six per cent to RM3.82 billion versus 2021 with underwriting margin improving to 39.1 per cent owing to improved claims experience.

Personal accident - saw a significant 43 per cent growth in premium year-on-year largely due to the Perlindungan Tenang Voucher (PTV) Program initiated by the Finance Ministry and Bank Negara Malaysia in collaboration with the general, life and takaful insurance industry.

The 2022 premiums for miscellaneous, and marine aviation and transit (MAT) classes of insurance also trended upwards by 10 per cent and eight per cent to RM2.7 billion and RM1.5 billion, respectively.

Medical and health insurance (MHI) saw a one per cent rise in premium to RM976 million compared to 2021. However, MHI underwriting margin more than halved to five per cent in 2022 from 12.1 per cent in 2021 due to higher claims.

Insurance claims - General insurance industry settled closed to RM19 million daily on total insurance claims. The amount of daily claims payout is reverting to pre-pandemic trend in 2022 with a 23 per cent y-o-y rise versus 2021.

Over the past decade, motor daily claims payout represented the majority of total claims averaging at RM13 million per day (72 per cent of total payout). Motor daily claims payout rose to RM13 million a day last year following reductions in the previous three years.

RM11 Billion Unclaimed Money

There is approximately RM11 billion in Unclaimed Money (WTD) belonging to the public as of March, 2023. The amount was out of the RM14.1 billion received by the Accountant-General's Department from companies or firms in accordance with Section 8 of the Unclaimed Money Act (Act 370) from 1977 until last month.

Of the total amount, about RM3.2 billion, such as in saving accounts, insurance and deposits, had been refunded to its owners. A large portion of the RM11 billion in WTD has been invested by the government in fixed deposits in accordance with the Financial Procedure Act 1957, (and) the interest earned (from fixed deposits) is accounted for in the Consolidated Revenue Account.

From that fixed deposit, government gets RM250 million in interest and we use that money for the people," he told reporters after a visit to Accountant-General's Department here today.

Unclaimed Money - WTD is defined as money that is legally payable to the owner but has remained unpaid for a period of not less than one year, money standing to the credit of an account that has not been operated in whatever manner by the owner for a period of not less than seven years and money to the credit of a trade account that has remained dormant for a period of not less than two years.

Owners are urged to claim their money by submitting an application through the eGUMIS portal, at the department's counters nationwide or by mail sent directly to the WTD Putrajaya office. The eGUMIS portal launched in 2020 received about 17.2 million visitors as of last month with the number of registered users being almost 4.4 million users.

During the same period, a total of 354,912 online WTD claim applications were received and of that amount, a total of RM199 million in claim amount was processed. The Accountant-General Department was developing an eGUMIS Mobile application, which can be used in the fourth quarter of this year.

The government also intends to amend Act 370, involving the period of transfer to the Consolidated Revenue Account from 15 years to 10 years, to redefine WTD according to Sections 8(a) and 8(c) of Act 370, and the amount of fines imposed on companies or firm for non-compliance.

RM17.5 Million Investment Scam

A total of 92 police reports have been lodged against the "Planetrade" investment scheme, which incurred about RM17.5mil in losses since two years ago. Three men and six women were detained in connection with the investment scheme last year.

The main suspect, who is the scheme's mastermind, has been charged under Section 420 of the Penal Code and Section 137(1) of the Financial Services Act 2013. Another suspect, the company director, was also charged under Section 109 of the Penal Code while seven others were released and became prosecution witnesses.

Various assets and funds belonging to the company were seized including RM700,533 in 27 bank accounts, six vehicles worth a total RM1.1mil and 11 million stocks. The investigation was conducted thoroughly. Those arrested had roles in managing or promoting the investment scam.

Among those arrested were investors who acted as authorised introducer. They received payments for every investor they brought in.

Malaysia Inadequate Retirement Fund

Bank Negara Malaysia (BNM) has cautioned that the retirement savings of an average Malaysian may likely dry up 19 years before their deaths. Given this forecast, it is crucial for the country to implement several “immediate priorities” to remedy the situation, as drafting social reforms to address the matter will require a longer timeframe.

Can Last 3 Years Only - In its Economic & Monetary Review 2022, BNM laid out how it came to the conclusion, stating that prior to Covid-19, the median savings for retirees aged between 51 to 55 years old can usually hold out for approximately five years. Following the numerous Covid-19-related withdrawals, however – which caused the median savings of certain segments in the society to drop drastically – the savings will now only last them around three years.

To further complicate things, average global life expectancies are also expected to increase, rising to above 77 years old by 2050. These facts all add up to contribute to BNM’s belief that the average Malaysian will deplete his or her retirement savings 19 years before their deaths. As such, it has suggested several shorter-term policies that can be implemented immediately to help rebuild the resilience and adequacy of the people’s retirement savings in a post-pandemic landscape.

BNM’s first idea involves the ringfencing and reinvestment of retirement funds to lengthen the accumulation stage, which it says, “needs to be urgently instituted”. “This involves reinvesting a portion of savings that would otherwise have been withdrawn upon the withdrawal age, thereby extending the accumulation period,” said BNM, adding that Employees Provident Fund (EPF) members in the B40 income group (aged between 50 to 54) can potentially gain up to an additional RM36,800 savings if they defer withdrawals and continue contributing up to the age of 60.

Aging Society - Aside from that, BNM also proposed enhancements to old-age social safety nets (usually in the form of targeted cash assistance programmes) to ensure that the basic needs of retirees are taken care of. In Malaysia, approximately 19.5% of individuals aged 60 and above are already receiving old-age benefits; this percentage is only expected to grow with Malaysia becoming an aging society. To support this potential development, BNM said that the government must enhance the adequacy and reach of Malaysia’s old-age safety nets.

“Adequacy can be enhanced by ensuring that assistances are linked to standard of living measures. For example, the minimum pension for public sector employees at RM1,000 per month could be used as a benchmark for cash assistance, similar to how it is used by EPF as the basis for Basic Savings. The reach of programmes can be widened by consolidating assistances towards a single flagship programme (such as Sumbangan Tunai Rahmah), thereby maximising ease of access,” said BNM.

Yet another suggestion by BNM is to tap into old-age productivity and social mobility to enhance income. This revolves around crafting suitable job opportunities for senior individuals who may want to work again. At present, BNM said that there is a lack of suitable occupations for such individuals as there is low employment demand for old-age workers. Some initiatives that can be implemented immediately include providing contract hiring incentives.

BNM’s final proposal is to ensure that comprehensive social protection data is made readily available to all relevant parties so that policy intervention can be carried out in a timely manner. The central bank specifically pinpointed the informal sector of the Malaysian workforce as a segment that will benefit from this. At present, information gaps exist in the informal sector because current social security arrangements and data are only captured via formal employment. Capturing data on informal and gig workers will allow the government to better assist them with boosting their retirement funds.

“As a start, automatic registration of all 18-year-olds into EPF and Social Security Organisation’s (SOCSO) databases can be explored. This is in line with the government’s pursuit of building a harmonised social protection database (Pangkalan Data Perlindungan Sosial – PDPS),” said BNM.

Low Wage Structure - Ultimately, BNM acknowledged that reforming the old-age protection system is a broad and highly complex policy challenge for Malaysia; it needs to be addressed over a longer time frame as most of its obstacles encountered are structural in nature, such as the country's low wage structure. However, it stressed that shorter-term policies can be executed in the meantime to address urgent needs.

“It is worth emphasising that these enhancements are no substitute for necessary long-term economic reforms that can raise current income levels. A labour market underpinned by robust productivity and high financial literacy are vital complements for a better pension system. Therefore, enhancements over both short- and long-term horizons are needed concurrently to ensure continued strengthening of the economy, supported by an effective social protection system,” the central bank said.

EPF Declares 5.35% Dividend 2022

The Employees Provident Fund (EPF) has declared a dividend rate of 5.35% for Conventional Savings for 2022, with a total payout amounting to RM45.44bil as well as a 4.75% for Syariah Savings, with a payout amounting to RM5.7bil. In total, the retirement fund’s payout for 2022 amounts to RM51.14bil.

Last year, EPF declared dividends of 6.1% for conventional savings (for the year 2021) and 5.65% for syariah savings. Over the past 10 years, EPF's dividend payout for conventional savings has 5.8% in 2010 followed by 6% (2011), 6.15% (2012), 6.35% (2013), 6.75% (2014), 6.4% (2015), 5.7% (2016), 6.9% (2017), 6.15% (2018), 5.45% (2019) and 5.2% (2020).

For syariah savings, it recorded dividends of 6.4% in 2017, 5.9% (2018), 5% (2019) and 4.9% (2020).

Driven by high market volatility and lower valuations across equity and fixed income markets, the EPF recorded a lower total gross investment income of RM55.33bil as of Dec 31,2022 compared to RM68.89bil in 2021.

From the gross investment income of RM55.33 bil, RM6.83bil were allocated to Simpanan Shariah. A total of 74% of the total amount came from Shariah-compliant counters that underperformed, which in turn impacted the EPF’s Simpanan Shariah performance for the year.

Mass Withdrawal - EPF claimed that the assets under management (AUM) remained stable despite the withdrawals coming up to RM145 bil. EPF’s investment assets remain intact and closed at RM1.003 trillion in December 2022, which is a slight reduction of 0.7% from the RM1.01 trillion in 2021.

By broad asset class, Fixed Income instruments made up 47% of investment assets, while Equities comprised 42%. Real Estate and Infrastructure as well as Money Market instruments made up 7% and 4% of EPF assets, respectively.

As for its asset class, equities contributed RM30.54bil, or 55% of the EPF’s total gross income, lower compared to the RM41.06bil recorded in 2021.

Foreign listed equities, which yielded a return on investment (ROI) of 9.27%, continued to be the driver of returns for this asset class. As of Dec 2022, foreign investment made up about 36% of the EPF’s investment assets and contributed 45% of the EPF’s total gross investment income.

The private equity portfolio also demonstrated strong performance, recording an ROI of 13.65%. This portfolio generated lower gross investment income compared to 2021, largely due to lower valuations of the underlying assets, apart from lower distributions received for the year.

Malaysia - Phone Screen Protector - RM2,099

A student was left reeling after being asked to pay RM2,099 for "insurance" after buying a RM25 screen protector. The 23-year-old biomedical science student, said she was walking around a a mall near Petaling Street when a promoter offered her a screen protector and mobile phone cover for just RM25.

She added that the promoter told her that he needed to register her for insurance to cover any damage to the screen protector and asked for her MyKad. When she was about to pay, the cashier told her that the total was RM2,124, which was RM25 for the phone cover and screen protector and RM2,099 for the insurance.

She asked for clarification and was told that the 'insurance' could not be cancelled after it was registered. She did not have that much cash on her and the promoter appeared and "helped" her negotiate the cash price down to RM1,575.

She said the shop owner had refunded her RM1,575 after the police intervened. She added that the shop owner had thrown in the screen protector and phone cover for free.

Many have since told me that they or their friends had faced similar situations but had never reported it. Many suspected the shopkeeper and so-called ‘insurance’ company are same people; these people target students and those who are new to the city.

Insurance Scam - Malaysia

A woman lost RM224,600 after falling victim to a scammer posing as an insurance agent who claimed that her husband had submitted some false claims. The 58-year-old victim was with her husband when he received a call from the scammer, who claimed to be an insurance agent, at 8.30am on Feb 14.

When the call was received by her 61-year-old husband, both victims were at home in Kampung Pulau Durian Tunggal and the woman then spoke to the suspect, and denied that her husband had submitted a false insurance claim.

Despite the denial, the call was transferred to a person who claimed he was a police officer, who urged the victim to lodge a report but was then told that her husband was involved in illegal money laundering and that an arrest warrant had been issued. 

The woman then denied the money laundering claims but the fake police officer continued to badger her and asked her to provide their bank account information and savings balance. On Feb 22, the woman was asked by the scammers to transfer all their money to her Bank Islam account for the purpose of the investigation but yesterday, she realized that the RM224,600 in her account had been transferred to a third-party account without her knowledge.