PETALING JAYA: A decline in motor insurance weighed on the general insurance industry in the first half ended June 30 this year, as it registered its steepest half year drop in recent years and with a further decline expected for the full year.
The General Insurance Association of Malaysia (PIAM) said the industry bore the full brunt of the Covid-19 pandemic.
The movement control order (MCO) took effect on March 18 to curb the spread of the virus.
“Gross direct premiums declined 3.6% to RM8.6bil for the first six months of 2020 compared to the same period last year.
“Motor, the dominant insurance class, was down significantly by 7.4% at RM 3.87bil largely attributable to the more than 40% decrease in total vehicle sales for half year 2020, ” the industry association said in a statement yesterday.
The biggest drop was in the personal accident insurance which declined by 13.4% to RM522mil.
PIAM said marine, aviation and transit (MAT) insurance dipped by 0.7% to RM800mil impacted by shrinkage of 9.0% and 8.7% in cargo and offshore oil-related classes respectively.
Fire insurance recorded a 2.2% increase to RM 1.76bil while medical and health insurance rose by 3% to RM586mil.
PIAM also pointed out despite the significant reduction in traffic movements nationwide during the MCO and its extended duration, total motor claims paid out by insurers remained high at RM2.4bil in the first half of the year.
The alarming incidence of road accidents in Malaysia poses a serious concern to the industry, which saw an increase of 16% over a five-year period from 2015.
Based on the Transport Ministry’s statistics, there were 567,516 accidents in 2019.
“A complete mindset change is required to transform the driving habits of Malaysian motorists.
“High risk drivers with their dangerous driving behaviour affect public safety in the same way as drink-drive motorists.
“Their risky and irresponsible driving behaviour should be recognised with higher insurance premiums, ” said PIAM chairman Antony Lee.
Lee pointed out good and safe drivers should not be subsidising the bad drivers, adding the time for the change is now.
He said PIAM would step up its efforts with the Ministry of Transport, Road Transport Department, police and all stakeholders to reduce road accidents in the country.
“The industry eagerly awaits the full liberalisation of the motor insurance tariff by Bank Negara which will pave the way for a risk based pricing model for motor insurance premiums, ” he said.
Meanwhile, PIAM CEO Mark Lim pointed out there were fewer vehicles stolen for the seventh straight year which is a record in itself.
“The total number of stolen vehicles went down by 39% from 5,512 to 3,340 vehicles for all classes during the first half of 2020 compared to the same period last year, ” he said.
Lim said PIAM and the Vehicle Theft Reduction Council of Malaysia Bhd attributed the decline in car thefts due to the “unrelenting efforts, commitment and hard work of the police, Customs and all law-enforcement agencies for the outstanding results in combating vehicle theft in the country”.
On the business outlook, he said it would be extremely challenging as the Covid-19 pandemic has yet to be fully played out.
“PIAM expects the industry to decline further for the full year with the road to recovery a long and arduous one ahead, ” Lim added.