Malaysian Re identifies key trends in regional insurance

The health insurance sector sees growth amid rising risk awareness

Three key trends are influencing the insurance market, not just in Malaysia, but regionally. These trends could make or break Malaysia’s overall insurance penetration rate, which stood at 5% in 2022. The life insurance penetration was higher at 3.7%, and non-life insurance was lower at 1.3%. 

Mainly, insurers in Southeast Asia are reevaluating their customer journey, Malaysian Re revealed in its recent report. Transformation is inevitable where insurance offering is bundled with preventive solutions and possibly value-added services. 

“Second, insurance is embedded or combined with other lifestyle-based propositions to enhance experience and add value. And third, insurers are entering partnerships to expand their outreach and embed their product with a broader experience tailored to the interests  of the customer,” Malaysian Re’s fifth edition of its annual Malaysian Insurance Highlights (MIH 2024) revealed. 

The report further examined the impacts of the evolving risk landscape on Malaysia’s insurance market, particularly focusing on personal insurance lines. 

The lack of adequate coverage leaves many vulnerable to financial shocks from disasters or life events, with only 41% of the population holding life insurance policies. This discrepancy is exacerbated by the predominant use of life insurance as an investment vehicle rather than for risk protection.

The COVID-19 pandemic has increased awareness of the need for insurance, prompting a notable rise in new life insurance premiums and policies in 2021. Despite this, challenges persist in ensuring broader coverage across socioeconomic groups.

Malaysia's family takaful sector has seen robust growth, with total premiums increasing nearly 50% in 2021, driven largely by investment-linked products.

Efforts to enhance insurance uptake may require targeted regulatory interventions to address affordability and awareness barriers, crucial for safeguarding both individuals and businesses against unforeseen risks.

Key issues in the country also include the insurability of climate-related risks, advancements in catastrophe modelling, and growth opportunities in health insurance. 

The report highlights public awareness of insurance benefits amid growing uncertainties, though affordability remains a challenge. Insights were gathered from industry experts, emphasising the need for technological, climatic, and socio-economic risk responses.

Malaysian Re collaborated with Faber Consulting AG for this edition.