A stable outlook on Malaysia's non-life insurance segment is maintained by ratings organisation AM Best. The agency cites regulatory initiatives and economic expansion that are supporting robust premium growth and higher insurance penetration, adding that the segment is also benefiting from the de-tariffication of motor and fire insurance, alongside measures aimed at curbing medical inflation.
Motor and fire insurance remain the main anchors of Malaysia’s non-life market, accounting for more than 65% of total non-life premiums. Since the phased liberalisation of tariffs for the two lines began in July 2016, pricing has progressively shifted towards a more risk-based approach. AM Best projects that de-tariffication will encourage product innovation, improve service quality, better align premiums with underlying risks, and enhance market efficiency, although it could place pressure on underwriting margins over the intermediate term.
"Malaysia’s non-life insurers continue to maintain healthy underwriting profits through disciplined underwriting and effective pricing strategies, supporting the industry’s long-term sustainability. The segment remains poised for continued growth," said AM Best Senior Financial Analyst Sin Yee Chuah.
Malaysia’s non-life segment recorded an improved underwriting profit in 2025, with a combined ratio in the low-to-mid-90% range. The wider economy is being supported by resilient domestic demand, particularly household consumption and investment, as well as strong electrical and electronics exports and continued data centre investment.
AM Best Director and Head of Analytics Victoria Ohorodnyk, said the stable outlook remains exposed to external risks. "Malaysia’s high dependence on trade leaves the economy exposed to weaker global demand, higher tariffs and disruptions to regional supply chains," she said. "Heightened geopolitical tensions could also weigh on exports and business investment."
Meanwhile, a pilot phase of the RESET Strategy, which introduces a standardised base medical and health insurance/takaful plan with a co-payment feature, is targeted for the second half of 2026, with full rollout expected by early 2027. The initiative aims to improve affordability and pricing transparency while addressing medical cost pressures. Flooding also remains a persistent tail risk, with climate change expected to increase the frequency and severity of extreme weather events and contribute to greater volatility in insurers’ profitability.