De-tariffication of Malaysia’s motor and fire insurance impacts marketplace
In light of the recent de-tariffication of the dominant property classes, motor and fire, Malaysia’s insurers need to embrace new competitive parameters such as risk-based pricing, tailored services and product innovation.
This is according to Malaysian Re’s new research publication on key trends in Malaysia’s insurance market, Malaysian Insurance Highlights.
The research, called Malaysian Insurance Highlights, focused on five major trends, namely detariffication, market consolidation, B40 strategies, Takaful prospects and insurtech.
“Malaysia’s insurance industry is facing the convergence of transformative challenges and opportunities, such as digitalisation, regulatory reform and changing consumer expectations,” said Zainudin Ishak, president and chief executive officer of Malaysian Re. “Our inaugural edition of the Malaysian Insurance Highlights analyses these trends while putting forward an authoritative view on our market-place, combining rigorous data analyses with in-depth executive interviews.”
The report said that de-tariffication will benefit consumers, insurers and, ultimately, society at large. Henner Alms, partner at Dr Schanz, Alms & Company and co-author of the report, said that the de-tariffication of Malaysia’s motor and fire insurance strongly impacts the marketplace.
“However, the liberalisation has slowed, but not disrupted the growth in both lines of business,” he said. “Over time, it is expected to result in improved risk management practices among insurers and more risk-conscious behaviour by consumers.”
Other topics covered in the report include insurers’ beliefs that the government needs to broaden its current B40 approach. In November 2017, Bank Negara Malaysia launched Perlindungan Tenang, aimed at expanding the insurance and takaful penetration among the B40 – the bottom 40 percent income group.
“Thus far most respondents still need further convincing if, despite the various government measures taken, the B40 insurance will provide a viable commercial proposition,” said Malaysia Re. “Some experts point out that the government should consider measures such as capital relief for those insurers that engage in B40 insurance, ideally as part of a comprehensive B40 insurance strategy that goes beyond healthcare.”
A majority of interviewees emphasised that Takaful has a natural role to play in providing cover to the B40 segment.
The report also predicts that digitisation will reshape Malaysia’s insurance industry over time, with product innovation based on personalized added-value services.
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