THE general insurance industry registered a decline of 0.8% in 2019 with total gross direct premiums of RM17.41 bil. Motor remained the largest class with a market share of 48.3% followed by fire at 19.3%.
Motor insurance recorded gross direct premiums of RM8.42 bil or a drop of 0.4%. This is despite an increase in total new vehicle sales in 2019. The local automotive industry recorded total vehicle sales of 604,287 units in 2019 compared with 598,598 units in 2018.
Motor insurance has been registering underwriting losses for more than 10 years. Average premium per policy has been on a downward trend since 2016 while overall costs of vehicle repairs have risen owing to increases in motor spare part prices amongst other factors.
In 2019, an underwriting loss of RM335 mil was recorded with RM5.48 bil paid out in motor claims. On a daily basis this amounts to RM15 mil per day paid out by motor insurers for property damage, bodily injury and vehicle theft. A major factor is the high accident rate and fatalities nationwide. Statistics show that Malaysia has one of the highest road accident and fatality rates in the region.
In the pricing of motor insurance premiums, it is important to reward the good risks and charge the bad drivers more. This means that a driver who is in a class that is more likely to experience road accidents should pay a higher insurance premium compared to a good driver with a clean record.
The General Insurance Association of Malaysia (PIAM) is currently in discussions with Bank Negara Malaysia on the next phase of the motor tariff liberalisation to adopt a more equitable approach through the use of risk-based pricing models.
There will be incentives for safe drivers with accident-free records. In this way PIAM hopes that the high risk drivers will be motivated to change their driving behaviour to enjoy the benefit of a lower insurance premium.
PIAM says thee industry eagerly anticipates further liberalisation and look forward to the eventual opening up of the market.
Meanwhile the number of stolen vehicles continued to its downward trend in 2019, declining 21% from 13,581 to 10,729 vehicles for all classes. Since 2014, fewer vehicles have been stolen year-on-year.
Fire insurance grew 1.1% and maintained its position as the second-largest class with gross direct premiums of RM3.37 bil. Marine, aviation and transit (MAT) insurance surged 5.3% with gross direct premiums of RM1.35 bil owing to a recovery in the offshore oil-related sector. The miscellaneous class recorded a drop of 2.9% with gross direct premiums of RM 2.08 bil.
Medical and health insurance (MHI) declined 11.4% to RM1.02 bil while personal accident insurance dipped 1.3% to RM1.19 bil. Medical claims have been on the rise owing to inflation and a host of other reasons.
Malaysia has one of the highest medical inflation rates among Asean countries in recent years. The expected increase in medical claims for 2019 is 13%. – Feb 27, 2020
