General insurers brace for sombre prospects this year, says PIAM

The number of people buying travel insurance has dropped a lot, according to chairman


The general insurance industry is expected to be at this year due to the deteriorating growth for the past few years.

Gross written premiums (GWP) shrank by 0.1%, or a decline of RM20 million, to RM17.65 billion last year compared to RM17.67 billion in 2016.

In 2014, the GWP growth rate was 5.9%, which subsequently declined by more than half to 2.2% a year later.

It further decelerated to 1.1% in 2016, before it entered the red zone at a negative growth of 0.1% last year, based on data provided by General Insurance Association of Malaysia (PIAM).

For 2018, PIAM — which has 21 direct insurers and five reinsurers — did not set a big target, but it remains hopeful and optimistic.

“We expect more of the same. We will be happy with a single-digit growth between 0%-2%.

“If we get up to 3%, it means that we are doing very well,” PIAM chairman Antony Lee (picture) said in a media briefing of the general insurance industry performance in 2017, held in Kuala Lumpur recently.

“Awareness is a big issue. Motor insurance is compulsory, but if we look at personal accidents, for example, travel insurance actually shrank after the introduction of the opt-in ruling by the Malaysian Aviation Commision.

“The number of people buying travel insurance has dropped a lot,” Lee said.

Lee made a comparison to a mature market like Singapore, of which more than 70% travellers have insurance — versus Malaysia at below 20%.

He also singled out flood insurance for cars which have less than a 5% take-up rate.

“Home insurance has only a tiny amount of people buying it,” he added.

As it is, the two largest classes — motor and fire insurance — both registered growth last year, but they were weighed down by a double-digit drop in marine aviation and transit (MAT) and personal accident insurance.

The biggest segment, motor insurance, only managed to grow 1.9% to RM8.32 billion of GWP, giving it a market share of 47.1%.

Meanwhile, the second-largest class — fire insurance — recorded a 4.2% growth at RM3.41 billion, with a market share of 19.3%.

Medical and health insurance grew by 7.1% with premiums reaching RM1.1 billion, while the miscellaneous class comprising bonds, liabilities, engineering and workmen’s compensation grew at 0.2% with GWP totalling RM2.35 billion.

MAT and personal accident insurance dragged down the industry with a 14.6% to RM1.34 billion and 12.6% to RM1.13 billion decline respectively.

PIAM associated the decline in MAT to the weak oil and gas sector as seen last year.

Overall, the industry registered a 31.3% year-on-year drop in underwriting profit to RM1.05 billion, from RM1.53 billion in 2016.

The motor, as well as medical and health insurance classes both recorded losses at RM356 million and RM34 million respectively, while other classes maintained profitable last year.

On a daily basis, RM14.7 million was paid by insurers for motor claims on property damages, bodily injuries and theft.

Overall net claims incurred ratio also increased to 57.5% from 54.5% in 2016, which means for every dollar of premium, the industry paid 57.5 sen for claims.

Embracing a challenging year, PIAM will intensify its communications and awareness efforts to bring insurance closer to the people which include campaigns and outreach programmes.

In addition, PIAM will intensify collaboration with major stakeholders including the authorities to reduce road accidents nationwide.

Latest numbers up to September 2017 registered 5,083 deaths on the road from 400,788 accidents.

PIAM has set a target to reduce national road accidents by 20% for 2018 and 50% from 2020 onwards.

On a positive note, the industry recorded a decline of 23% in motor theft counts to 15,323 for all classes of vehicles, from 20,005 vehicles stolen in 2016.

Data from PIAM revealed that Proton Wira, Toyota Hilux and Perodua Kancil were the top three stolen cars, while Toyota Vellfire topped the charts in terms of steal frequency.