2nd April 2021 - 3 min read
The life insurance industry saw a slight decline of 3.2% in new business total premiums last year, with the figure reducing from RM11.8 billion in 2019 to RM11.4 billion in 2020. The Life Insurance Association of Malaysia (LIAM) revealed that the industry’s overall new business sum assured had also fallen by 7.2% to RM437.2 billion in 2020.
“The decline in overall new business total premiums and new business sum assured was attributed to the slowdown in business environment due to the Covid-19 pandemic and the restrictions to the face-to-face selling during the movement control order and conditional movement control order imposed in the Klang Valley and other states in the country,” said LIAM in a statement.
The total new premiums of traditional and group insurance fell 10.3% and 3.5% respectively, although traditional policies’ new business sum assured improved by 7.2% to RM23 billion last year. Meanwhile, the new business sum assured of investment-linked policies fell 21% and group policies dipped by 2.2%. However, the total new premiums of investment-linked policies went up slightly by 1.2%.
Overall, the number of new policies last year shrank by 7.1% to 1.2 million units from 1.3 million units in 2019. Investment linked policies fell by 20.7%, but traditional and group new policies increased by 13.1% and 5.3% respectively.
According to LIAM president Loh Guat Lan, these trends show that consumers are generally more mindful about their spending during unprecedented times, preferring to tailor their purchases to smaller traditional policies with lower protection due to the Covid-19 pandemic which may have affected their finances. “During an economic slowdown, there is a tendency to shift from savings component type of plans to basic plans with emphasis on protection,” she added.
Loh also highlighted that during the pandemic, activities of face-to-face life insurance selling were restricted. “Investment-linked insurance which is greatly affected is an insurance plan which has more unique features and requires face-to-face interaction by agents to explain these features and ascertain its suitability before an investment-linked plan is recommended,” she said.
LIAM CEO Mark O’Dell was pleased to note that despite the pandemic, the occurrence of policyholders discontinuing their insurance coverage in 2020 was the lowest in the last five years. He further said that that despite the challenges brought about by Covid-19, the insurance industry as quickly adapted itself to the new norm.
“Other than online channels, we continue to serve our customers via various distribution channels such as telco providers, banks, agents, direct walk-ins to branches, and post offices,” he said. “A number of insurers introduced new plans with low premiums via the direct channel platform. Online products are available on respective insurers’ websites including medical insurance and critical illness protection plans.”
(Source: The Star)
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