KUALA LUMPUR: RAM Ratings Services Bhd has maintained a stable outlook on Malaysia's insurance and takaful sector, supported by strong capital buffers that continue to cushion market volatility and earnings pressure.
RAM Ratings, citing its latest report, "Insurance and Takaful Insight: Paving the Way Forward”, said it expects new business growth for life insurance and family takaful to remain broadly flat in 2026, following a slight contraction in 2025 amid market volatility and cost-of-living pressures.
"Non-life growth is projected to moderate between five and six per cent as vehicle sales normalise.
"Credit fundamentals, however, remain resilient, with 10 out of 12 RAM Ratings-rated insurers and takaful operators (ITOs) on stable outlooks and one non-life reinsurance group, with two entity ratings, on a positive outlook,” it said.
Senior vice-president of Financial Institution Ratings Sophia Lee said medical and health insurance/takaful (MHIT) remains a key area of focus as the expiry of Bank Negara Malaysia's interim measures at end-2026, including the 10 per cent annual repricing cap, may lead to steeper premium adjustments if medical claims costs remain elevated.
"The success of ongoing MHIT reforms will be critical to improving pricing transparency and cost predictability,” she said.
Lee said key initiatives include the pilot implementation of an affordable base MHIT product this month and the adoption of diagnosis-related group payment mechanisms.
"While these reforms are expected to support more sustainable pricing over time, their effectiveness will hinge on the extent of adoption and healthcare cost containment,” she said.
Meanwhile, RAM Ratings said while increasing digitalisation of motor claims is expected to improve claims efficiency, pricing accuracy and transparency across the non-life segment, the benefits will depend on adoption rates and the quality of data integration.
"Digitalisation and regulatory initiatives continue to drive insurance and takaful penetration, while the potential entry of new digital insurers and takaful operators after the application deadline in December 2026 could further enhance financial inclusion and market access,” it said.
Members of the public can access "Insurance and Takaful Insight: Paving the Way Forward” report at www.ram.com.my - Bernama
