KUALA LUMPUR: More insurance payment defaults are anticipated in the fourth quarter of the year due to cashflow constraints from individuals and businesses after the six-month moratorium on loan and financing repayments ends, according to Allianz Malaysia Bhd chief executive officer Zakri Khir.(pic)
Bank Negara has announced a six-month deferment for all loan and financing repayments from April, to assist individuals, small and medium enterprises (SMEs) as well as corporations manage the impact of the Covid-19 pandemic.
Although there is minimal impact on Allianz Malaysia on insurance payment defaults, Zakri expected the group to experience more payment defaults mainly by its long time serving customers from October.
“In view of the current situation, we anticipate some customers may encounter cash flow problems. We will discuss with them to achieve a win-win situation.
“We will be able to tell the number of defaults towards the end of this year. We will manage this well, ” he said during the launch of its new insurance product ‘Smart Retail Shield’ here.
Smart Retail Shield, a comprehensive insurance solution, catered for the small and medium enterprises (SMEs) to build on their fire insurance coverage with customisable coverage including protection against commercial fire and coverage, safeguarding of business assets, taking care of the welfare of employees and protection of employees against infectious disease which manifested within the business premises.
On the Covid-19 pandemic, Zakri said it is a wake-up call to businesses across all industries to focus on survival and sustainability as 70% of SMEs saw a drop in sales during the movement control order (MCO).
Currently, there are 1.08 million SMEs in Malaysia, employing about 10 million people.
During the MCO, Allianz General Insurance Company (M) Bhd chief sales officer Horst Habbig admitted that sales of the insurance products was down mainly dragged by its customers delaying to renew the vehicles road tax insurance.
Given that the insurance industry is recession-proof, Zakri said Allianz general insurance is expected to post higher sales in the first quarter ended March 31 from RM548.3mil in gross written premium a year ago.
“We are above our sales from last year. This is because our customers trust in us and see value, quality in our offerings, ” he noted.
However, with the heightened uncertainty for the year, Zakri said the group wants to “survive” the tide of the second half of this year. “As of now, we are doing alright. It is still too early to talk about plans.
“We do not have a long or medium term plan, we have only short term plans for now, ” he added.
Moving forward, Zakri believed that the growth of the insurance industry would be slower as consumption of insurance products are likely to reduce from disposable income falling amid Covid-19 pandemic and sluggish growth of the economy.
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