THE haze is expected to drive more respiratory illnesses, adding to medical claims already affected by global logistical disruptions that have increased drug and medical equipment costs.
Malaysia’s haze episode could persist until February 2027, according to forecasts cited in a report by MBSB, further complicating insurers’ efforts to manage healthcare expenses.
A key concern is the expiry of Bank Negara Malaysia’s 10% cap on medical and health insurance/takaful (MHIT) premium increases in 2026.
Insurers may raise premiums in 2027 to recover higher claims costs, but steep increases could trigger policy cancellations and regulatory intervention as households struggle with rising living expenses.
Providers may therefore have to balance premium adjustments against thinner profit margins.
That said, MBSB maintained its “Positive” recommendation on the local insurance sector, despite mounting pressure from the prolonged haze, rising medical claims and higher operating costs.
While attractive valuations, strong economic growth and dividend yields continue to support the sector, analysts expect earnings growth to moderate as insurers face increasing headwinds.
MBSB said Allianz Malaysia is the most exposed to these pressures because of its higher reliance on regular healthcare premiums.
It maintained a “Buy” recommendation on the stock with a target price of RM22.73.
Syarikat Takaful Malaysia Keluarga (STMB), meanwhile, is less vulnerable due to its greater exposure to credit-linked and employee benefit-style healthcare products.
MBSB also maintained its “Buy” call on STMB, with a target price of RM3.44.
General insurer LPI Capital is expected to experience negligible direct impact from healthcare claims.
Beyond medical costs, insurers face volatility in investment income as global bond yields rise, elevated reinsurance expenses linked to geopolitical tensions and abnormal weather, and competition from technology-driven foreign players.
Cloud-seeding operations could also increase the risk of flash floods and landslides, potentially raising motor and fire insurance claims.
Nevertheless, MBSB sees opportunities in the sector’s attractive valuations and dividend payouts, with yields generally in the mid-single digits.
General insurance gross written premiums are expected to benefit from economic activity and a recovery in total industry vehicle sales, while life insurance growth remains supported by protection products, bancassurance and employee benefits.
MBSB maintained its “Positive” sector outlook but warned that weaker economic growth, renewed cost inflation and natural disasters could further pressure earnings.
It favours Allianz and STMB, while advising investors to remain cautious about persistent claims inflation and regulatory risks.—Oct 13, 2026
