Malaysia: Insurance and takaful market to grow modestly in 2024

The Malaysian insurance and takaful sectors are expected to experience modest growth in demand for coverage in 1H2024 due to uncertainties of interest rate movements and inflationary pressures in developed economies, according to the investment bank, AmInvestment Bank.

In the same period, claims are expected to stay elevated due to inflation and a weaker ringgit, reported The Malaysian Reserve citing AmInvestment Bank.

Gross written premiums/contributions growth are expected to be modest in 2024 amid elevated household debt and pressures on the cost of living with the potential upside risk to inflation from the extension of subsidy rationalisation to RON95,” AmInvestment Bank said.

Inflation in 2024 is expected to fall within the range of 2.5% to 3.5%, taking into account the effects of subsidy rationalisation and the impact of the services tax increase. “Nevertheless, we see upside risk to this projection in the event the scope of subsidy rationalisation is extended to RON95 fuel,” AmInvestment Bank said.

We expect gross written premiums/contributions of general insurance/takaful players to register a high single-to-low double-digit growth in 2024,” it said.

AmInvestment Bank said it expected growth in motor premiums/contributions in 2024 to be lower in line with the lower total industry volume anticipated after the end of the Sales and Services Tax (SST) exemption. At the same time, it anticipated gross life/family takaful premium/contribution to grow by mid-single to 10% in 2024.

We continue to see challenges from macro headwinds and inflationary pressures resulting in consumers remaining cautious in committing to the purchase of longer-term life insurance plans, it said.

We continue to expect medical claims to trend higher amid inflationary pressures. This should continue to see life insurance/takaful companies pricing up premiums/contributions to mitigate pressures from rising medical claims.

As for general insurance/takaful, we anticipate motor claims to stay elevated due to the weaker domestic currency which will cause prices for parts replacement to increase,” it said.

Meanwhile, it expected adverse weather conditions to impact fire claims resulting in the net claims incurred ratio for this segment being higher than the pre-COVID-19 pandemic level of 25%.

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