The life insurance industry in Malaysia is projected to grow from MYR50.70bn (US$11.98bn) in 2020 to MYR65.86bn (US$15.68bn) in 2025, in terms of gross written premium, according to GlobalData, a leading data and analytics company.
GlobalData has revised Malaysia’s insurance forecast in the aftermath of COVID-19 outbreak. As per the latest data, Malaysian life insurance industry is expected to grow at a compounded annual growth rate (CAGR) of 5.38% between 2020 and 2025, due to the gradual economic recovery.
Amrita Sheela, Insurance Analyst at GlobalData, comments: “Malaysian life insurance industry is driven by retail consumer segment, which accounted for over 90% of total premiums in 2020Indonesia. The economic slowdown and uncertainty triggered by the COVID-19 pandemic restricted consumer spending and impacted life insurance business. As a result, life insurance industry grew by 4% in 2020 against 9% growth registered in 2019.”
New business premiums declined by 3.2% in 2020, compared to 14.15% growth in 2019. This was mainly due to the lockdown restrictions in the first half of 2020. The gradual opening of economic activities and increased digitization helped recovery in the second half of 2020.
Premium income from renewals, on the other hand, increased by 6.32% in 2020, compared to 7.49% in 2019. Renewals in 2020 were supported by benefits offered by insurers such as discounts on premiums and extension on premium renewal dates, helping customers continue their insurance coverage during the pandemic. Furthermore, increased awareness and COVID-19 assistance offered by life insurance policies encouraged policyholders to renew their policies.
The recent measures announced by the government in 2021 budget allowing withdrawal of Employees’ Provident Fund to purchase life and critical illness cover and introduction of ‘Perlindungan Tenang’ voucher program providing simple and affordable microinsurance products to low-income groups are expected to support demand for life insurance policies.
Ms Sheela concludes: “Malaysian life insurers have been successful in mitigating the impact of COVID-19 by tailoring policies and offering flexibility to customers. This, along with policy support from the government, will help drive the adoption of life insurance in the country.”