Malaysia: Insurance business models seen as "broken"
Source: Asia Insurance Review | Dec 2017
Existing business models in the insurance market are essentially broken from the perspective of the population that remains underserved, said Bank Negara Malaysia (BNM) governor, Datuk Muhammad Ibrahim.
While life insurance premiums and family takaful contributions had grown by 48% since 2010, the penetration rate has only increased by five percentage points to 56% indicating that the industry was increasingly concentrated on a narrow insurance segment, he said.
“If we eliminate double-counting, only 35% of adults have some form of coverage,” he said at the 7th Malaysian Insurance Summit in October.
He said the industry should concentrate on the underserved segment to allow them to be protected by at least one cover. The government has targeted 75% penetration by 2020.
Insurance and takaful products are still not attractive to many people as many of them are too complex and unaffordable, he said. Even for the population that was being served, making a purchase or a claim was a process fraught with anxiety and headache.
Datuk Muhammad said to address the gap issue, products and delivery channels need to be diversified to better suit the whole population, adding that this means a renewed focus on protection needs, especially for first-time buyers. A