The General Insurance Industry registered a marginal growth of 0.7% with gross written premiums totaling RM 9.23 billion in the first six months of 2018 compared to the same period in 2017. 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 RM 4.2 billion with a 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 RM 1.77 billion, despite contracting 0.9%. MAT declined 7.4% with gross written premium reaching RM 0.76 billion due to the reduction in the Marine Hull class. Medical and Health insurance (MHI) grew by 7.6% to RM 0.68 billion while Personal Accident insurance rose 1.7% to RM 0.62 billion. The Miscellaneous Class comprising Bonds, Liabilities, Engineering and Workmen’s Compensation recorded an increase of 6.2% with gross written premiums at RM 1.20 billion.
Between January and June 2018, the total motor insurance claims incurred by the industry amounted to RM 2.71 billion. On average, motor insurers paid out a staggering RM 14.8 million per day in property damage, bodily injury and vehicle theft.
The number of accidents and road fatalities continue to be on the rise. Based on the statistics published by the Ministry of Transport, a total of 533,875 accidents were recorded in 2017, which is an increase of 2.4% from 521,466 accidents in 2016 or 9% from 489,606 accidents in 2015. Fatalities stood at 6,740 deaths in 2017. Motorcyclists topped the fatality chart, accounting for more than 60% of these figures every year since 2011.
PIAM Chairman, 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 behavior on the roads.” He added that PIAM look 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 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 recognized while good drivers are incentivized.
In line with this, PIAM continues to enhance consumers’ awareness on the Phased Liberalisation of Motor Tariff by rolling out the ‘Play Your Role Campaign’ and appointing Adibah Noor as the campaign ambassador. Adibah Noor is a household name and a renowned actress, comedian and singer nationwide. She is the ideal person to speak on the important topic of road safety and promoting good driving habits in Malaysia as she has the ability to convey messages and taglines with her unique style and sense of humor to a broad spectrum of audiences. The ultimate objective is to ensure Malaysian roads are safer with less traffic accidents and road fatalities.
Motorists requiring emergency roadside assistance can continue to rely on PIAM’s Accident Assist Call Centre (AACC) for help. Launched in 2013 the AACC toll-free hotline 15-500 operates 24/7 nationwide offering emergency roadside assistance such as towing services and responding to insurance claims enquires from motorists.
On a positive note motor theft counts declined 31% from 8,560 to 5,913 units of vehicles for all classes during the period January to June 2018. PIAM and the Vehicle Theft Reduction Council of Malaysia commend the unrelenting efforts, commitment and hard work of the Police (PDRM), Customs and other law-enforcement agencies to combat vehicle theft.
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. CEO Mark Lim highlighted, “The Motor Product Selector featured on PIAM’s website provides consumers with information on the motor insurance covers available. Consumers can select the protection based on their needs and receive quotations from insurance companies of their choice. This online platform connects consumers directly to the insurers to shop around for their motor insurance policies and facilitates their purchase process.”
With the new government having just taken over the helm for less than four months, Malaysia has witnessed certain changes affecting the economy and business entities. The introduction of 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 with 6% service tax 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.
On human capital and talent attraction, PIAM’s General Insurance Internship for Talent (GIIFT) project was launched in July 2015. Since then 276 university undergraduates from various study disciplines completed a 3-months internship with member companies. These young interns are given a first-hand feel of what the industry has to offer. Insurance companies have recruited 38 interns so far and more are expected to choose general insurance as their career of choice upon graduation.
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.