The general insurance industry registered marginal growth of 0.7% with gross written premiums totalling MYR9.23bn ($2.24bn) in the first six months of 2018 compared to the same period in 2017.
In a statement yesterday, the General Insurance Association of Malaysia (PIAM) said that it expects full year growth for 2018 to remain subdued.
In the first six months of this year, Motor remained the largest class of insurance with a market share of 45.6% followed by Fire at 19.2% and Marine Aviation Transit (MAT) at 8.2%. Except for Fire and MAT all classes of insurance grew during this half-year period.
Motor insurance recorded a gross written premium of MYR4.2bn with slower growth of 0.2% for the first half of 2018 compared with 2.1% growth for the same period last year. This was due to weaker consumers’ confidence amidst the uncertain economic and political environment prior to the 14th General Election. According to the Malaysian Automotive Association (MAA), the growth in new passenger vehicles for the first half of the year was lower than the same period in 2017 with total new vehicles sales at 289,714.
Fire insurance maintained its position as the second largest class with a gross written premium of MYR1.77bn, despite contracting 0.9%. MAT declined 7.4% with gross written premium reaching MYR0.76bn due to the reduction in the Marine Hull class. Medical and Health insurance (MHI) grew by 7.6% to MYR0.68bn while Personal Accident insurance rose 1.7% to MYR0.62bn. The Miscellaneous Class comprising Bonds, Liabilities, Engineering and Workmen’s Compensation recorded an increase of 6.2% with gross written premium at MYR1.20bn.
Between January and June 2018, the total motor insurance claims incurred by the industry amounted to MYR2.71bn. On average, motor insurers paid out a staggering MYR14.8m per day in property damage, bodily injury and vehicle theft. The number of accidents and road fatalities continues to rise. Based on the statistics published by the Ministry of Transport, a total of 533,875 accidents were recorded in 2017, an increase of 2.4% from 521,466 accidents in 2016 or 9% from 489,606 accidents in 2015. Fatalities stood at 6,740 in 2017. Motorcyclists topped the fatality chart, accounting for more than 60% of the figure every year since 2011.
PIAM chairman Mr Antony Lee said, “Malaysia still has one of the highest accident and fatality rates in the region. One death is one too many and is definitely a tragedy. PIAM is intensifying collaboration with all major stakeholders to reduce road accidents nationwide. It may be possible to reduce national accidents by 20% in the near term and 50% in the longer term if we change our bad driving habits. We need to get serious about enforcement and charging bad drivers higher for their dangerous and irresponsible behaviour on the roads.” He added that PIAM looks forward to working closely with all government agencies on a concrete action plan as soon as possible to achieve its target. PIAM had already met the Minister of Transport, YB Anthony Loke, to explore initiatives that would make Malaysian roads safer for all motorists.
Although consumer education on road safety is important, enforcement by the relevant authorities is equally crucial. The Kejara demerit points system is welcomed by the insurance industry as the information on errant and high-risk drivers is useful. With the liberalisation of the motor tariff, information on traffic offenders will help insurers determine the risk profile so that bad risks are recognised while good drivers are incentivised.
On a positive note, motor theft counts declined 31% from 8,560 to 5,913 vehicles for all classes during the period January to June 2018.
Meanwhile, the industry has launched more new and innovative products to provide better protection to consumers. As at 27 August 2018, the industry has launched 40 new Motor and 29 new Fire products in the market.
PIAM says that the introduction of the Sales and Service Tax (SST) with effect from 1 September 2018 will adversely affect the industry. Insurance and takaful services including general insurance for individuals are among the items listed as taxable at 6% under SST. PIAM will present its position and will be appealing to the Ministry of Finance on the SST introduction and the impact on consumers.
Looking ahead, PIAM expects the operating and business climate to be challenging given the current market conditions. According to a recent study, uncertainty over the new government policies remain one of the top concerns among Malaysian businesses. Policy uncertainty, especially involving economic policy such as taxation, trade and investment, significantly impedes business decisions. PIAM anticipates that full year growth for 2018 will remain subdued.