Malaysia's general insurance to grow at 7.8% CAGR by 2028

The industry could see $5.0b in direct written premiums this year.

Malaysia’s general insurance sector is bound to climb at a compound annual growth rate (CAGR) of 7.8% from direct written premiums (DWP) of $5.0b in 2024 to $6.8b in 2028.

Forecasts from GlobalData indicated that Malaysia is expected to grow by 8.3% in 2024, thanks to motor and property insurance lines that are expected to make up for 73% of the general insurance DWP this year.

“Malaysian general insurance industry witnessed slower growth of 7.5% in 2023 as compared to 10.0% growth in 2022, due to slower economic growth and tight monetary policy,” Sneha Verma, Insurance Analyst at GlobalData said in a media release.

​

“The growth momentum is expected to rebound in 2024, supported by an increase in premium rates across general insurance lines driven by rising claims and high inflation, as well as heightened demand for natural catastrophe (nat-cat) insurance policies due to an increase in the frequency of extreme weather events,” Verma added.

In the Malaysian general insurance industry, motor insurance stands out as the leading line of business, projected to hold a substantial 46.9% share of the DWP in 2024. 

This dominance is bolstered by an anticipated growth rate of 8.9% for the year, driven primarily by increased vehicle sales. The Malaysian Automotive Association (MAA) reported a 5% rise in vehicle sales, with 202,245 units sold in the first quarter of 2024 compared to 192,615 units in the same period of 2023.

“Rising claims due to the increasing number of road accidents will prompt insurers to reassess their risk exposure and increase premium rates in 2024, which will support motor insurance growth,” Verma stated.

However, alongside the growth in vehicle sales, there has been a concerning rise in traffic accidents. The Traffic Investigation and Enforcement Department in Malaysia recorded a 10% increase in traffic accident cases in 2023, totalling 598,635 cases compared to 545,588 cases in 2022. 

Fatalities also saw a significant spike, rising by 104% to 12,417 in 2023 from 6,080 in 2022. 

Consequently, the average daily motor insurance claims paid rose to $3.2m (RM15.1m) in 2023, up from $2.84m (RM13.4m)in 2022, marking the highest figure in the past five years, according to the General Insurance Association of Malaysia (PIAM). 

Motor insurance is forecasted to grow at a Compound Annual Growth Rate (CAGR) of 7.5% from 2024 to 2028.

Following motor insurance, property insurance holds the second largest share, estimated at 26.4% of the general insurance DWP in 2024. It is expected to grow by 11.4% this year, supported by increased demand for natural catastrophe (nat-cat) insurance policies. 

Instances of torrential rain in various Malaysian states have driven a 33% surge in demand for fire insurance with flood coverage in the first half of 2023, compared to a 31% increase during the same period in 2022. 

Rising premium prices due to higher claims and inflation are also anticipated to bolster property insurance growth, projected to achieve a CAGR of 9.8% from 2024 to 2028.

Personal Accident and Health (PA&H) insurance ranks third, comprising a 10.1% share of the general insurance DWP in 2024. 

It is expected to see modest growth of 0.3% in 2024, driven by increasing health awareness and medical inflation, which contribute to higher demand for health insurance policies. PA&H insurance is forecasted to grow at a CAGR of 3.1% from 2024 to 2028.

Lastly, Liability, Miscellaneous, and Marine, Aviation, and Transit (MAT) insurance together are projected to account for the remaining 16.6% share of the general insurance DWP in 2024, serving various niche markets within the industry.

Onward looking Verma said economic recovery, increasing consumer awareness of insurance, and the recovery of vehicle sales will boost Malaysian general insurance industry over the next five years. 

“Persistent high claim payouts led by medical inflation, and the occurrence of regular nat-cat events will prompt insurers to reassess their risk exposure and increase premium rates in the short term.” Verma concluded.

($1.00 = RM4.72)