KUALA LUMPUR: New business total premium in Malaysia's life insurance industry grew by 1.8% in 2018 with group coverage gaining traction while individuals preferred traditional products rather than investment-linked products.
The Life Insurance Association of Malaysia (LIAM) announced on Monday that new business total premium rose to RM10.301bil from RM10.10bil in 2017.
For individuals, the traditional products business rose by 3.5% to RM2.305bil from RM2.227bil while for investment-linked products, there was a 4.3% decline to RM4.45bil from RM4.652bil, the industry body pointed out. However, there was a strong increase in the group segment, expanding by 9.4% to RM3.545bil from RM3.240bil.
Source: Life Insurance Association of Malaysia
LIAM said overall, the life insurance industry recorded a moderate 9.6% growth in insurance coverage among Malaysians in 2018 to RM1.51 trillion in sum assured for all policies combined. In 2017, it was RM1.38 trillion.
However, in terms of sums assured in force, traditional products declined by 1.8% to RM329.907bil in 2018 from RM333.091 billion in 2017 while investment-linked products recorded an 18.2% increase to RM623.218mil from RM527.320mil. Group policies recorded an 8.1% increase to RM556.339mil from RM514.483mil.
LIAM also said the per capita sum assured continued to rise from RM43,029 in 2017 to RM46,610 in 2018 but this was still below the amount needed to support one family member in the event of the death or disability of the breadwinner.
The" 2012/2013 Underinsurance Study in Malaysia" conducted by University Kebangsaan Malaysia and LIAM showed that the average mortality gap for each member of a family wass about RM100,000 to RM150,000.
All figures are the claims paid out in ringgit. Source: Life Insurance Association of Malaysia
As for the total claims paid out (table above), they increased by 6.5% from RM10.1bil in 2017 to RM10.8bil in 2018, mainly due to higher medical claims which rose by 11.7%
LIAM president Anusha Thavarajah said the outlook and prospects of the life insurance industry remain positive as the percentage of population with life insurance or takaful plans is still low at 54%.
“Taking into account policyholders with more than one life or takaful policies/ certificates, only 34 out of 100 people are insured,” she said.
The industry is also very encouraged with the decision of the overnment to provide a dedicated tax relief of RM3,000 for life insurance premiums (previously a combined tax relief of RM6,000 for EPF and life insurance/takaful). The incentive would certainly help to fulfil the needs of the rakyat in line with the industry’s aspiration to promote a fully inclusive society.
Anusha said basic term products have been made available through direct distribution channels i.e. online platform or walk-ins to branches since July 2017.
“The introduction of an easy and hassle-free distribution channel is to make life insurance purchase simple and quick and hence increasing the reach and penetration among the new generation of consumers.
“Critical illness insurance and medical insurance products will be available via direct distribution channels in March 2019.
“The life insurance industry has made significant progress in the migration to electronic payments (E-payment).
“As at end-December 2018, payments made by insurers via E-payment constituted 91% of the total volume of transactions and 87% of premiums received by insurers were through E-payment,” she said.