The general insurance industry, which continues to face pertinent challenges, expects to chart a steady growth in premiums next year in line with the projected economic growth of 5% to 6% in 2015.
General Insurance Association of Malaysia (PIAM) new chief executive officer Mark Lim Kian Wei said barring any unforeseen adverse impact or turnaround in regional and global economies, the industry was poised for steady growth next year.
“While motor insurance being the dominant class of business in Malaysia will continue to grow steadily, we foresee strong growth potential for non-motor lines products like medical and health, property/engineering and specialty classes.
“These lines of businesses are supported by strong domestic consumption and an overall increased consumer awareness for general insurance products,’’ he told StarBiz in an e-mail reply.
PIAM chairman Chua Seck Guan in a recent briefing said the industry, which registered a 6.4% growth last year, could grow between 6% and 7%.
Although the industry was poised for growth, Lim added there were still some key challenges facing the industry.
One of these, he said, was high claims incurred for third-party bodily injuries claims from road accidents and rising vehicle thefts.
“Road accidents and vehicle theft pose serious challenges for the industry as they contribute significantly to the losses of motor insurers. PIAM is working closely with the governmental agencies and all stakeholders to plug the leakages in claims cost and to educate all motorists on road safety and good driving habits.
“Regulatory developments, for example, the Financial Services Act 2013 which will require mandatory conversion of composite insurance and takaful operators to single insurance and takaful businesses will be another challenge,’’ he said.
On the liberalisation of the financial sector, he added the industry was proactively in engagement with Bank Negara on the impending liberalisation of the motor and fire classes of business targeted for 2016, when motor insurance and fire premiums will be detariffed.
For motor premiums, for instance, it would be, among others, based on a diverse list of risk factors like the driver’s risk profile to the vehicle make. Therefore, the premium rates that vehicle owners would be paying would correlate with their level of risk which includes claims experience.
Lim said the move to liberalise the insurance sector would promote greater efficiency, product innovation and a more equitable pricing structure for vehicle owners.
At the same time, further liberalisation of the motor insurance would enhance the overall viability and continuity of the motor insurance business in Malaysia, he said.