KUALA LUMPUR: Global credit rating agency, AM Best has maintained the stable outlook on Malaysia’s non-life insurance segment, citing regulatory initiatives designed to increase insurance penetration and phased de-tariffication of motor and fire insurance.
The Best’s Market Segment Report, "Market Segment Outlook: Malaysia Non-Life Insurance”, states that the non-life sector remains well-positioned for continued growth, even as the country’s real gross domestic product (GDP) growth is forecast to moderate in the near term amid global economic headwinds.
AM Best in a statement said Bank Negara Malaysia, the country’s central bank and lead regulator, continues to prioritise broader insurance and takaful penetration, currently in the low single digits for non-life.
Additional insurance market growth drivers include an expected rising demand for digital insurance and natural catastrophe coverage, along with premium rate hikes driven by high inflation and increasing claims frequency.
AM Best senior financial analyst, Sin Yee Chuah said Bank Negara Malaysia has progressively liberalised motor and fire insurance tariffs, introducing greater pricing flexibility in phases to support the transition to risk-based pricing since July 2016.
Ongoing regulatory measures are expected to help mitigate medical inflation and improve underwriting profitability of the health segment, while rising climate risks, particularly from severe flood events, are prompting regulatory actions to strengthen insurer preparedness.
Meanwhile, AM Best director, head of analytics, Victoria Ohorodnyk said these initiatives by Malaysia’s regulator are expected to reinforce the sector’s long-term financial resilience and risk management capacity.
Headquartered in the United States, AM Best is also a news publisher and data analytics provider specialising in the insurance industry with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. - Bernama
