The local life insurance industry registered a 14.19% increase in new business premiums in 2019, rising from RM10.3 billion in 2018 to RM11.8 billion last year. The figure was disclosed by the Life Insurance Association of Malaysia (LIAM).
According to the association, the increase was propelled by the robust growth in traditional business, investment-linked, and group business insurances. These insurance segments each increased by 30.12%, 11.05%, and 10.79%, respectively. Investment-linked policies, in particular, continued to be a popular product in 2019.
LIAM further added that the new policies issued in 2019 recorded an increase of 6.22% from 1.23 million policies in 2018 to 1.32 million policies in 2019. In total, the number of policies registered for the whole industry rose marginally from 12.67 million in 2018 to 12.74 million in 2019.
“The healthy performance of the life insurance industry reflects the increase in awareness among consumers on the importance of life insurance protection,” said the association.
LIAM also reported that the figure for new business sum assured has increased in 2019, rising from RM452.1 billion in 2018 to RM483.4 billion in 2019. This translates to a 6.91% growth.
The average sum assured for individual policy category, on the other hand, reached RM130,000 per policy holder. However, LIAM president Loh Guat Lan commented that the figure is not an adequate level of protection as there is still a wide protection gap in terms of the coverage required.
“Based on a study conducted by Universiti Kebangsaan Malaysia and LIAM in 2013, it is estimated that a family of five would need at least RM550,000 to meet their living expenses over the next five years, in the event of a loss of the breadwinner,” said Loh.
LIAM also noted that the total premiums in force as of last year stood at RM36.9 billion, rising by 7.39% from RM34.4 billion in 2018. The growth was mainly attributed to investment-linked and employee benefit schemes under group businesses. Additionally, the total sum assured in force increased to over RM1.63 trillion, up 7.83% from RM1.51 trillion in 2018.
In terms of total claims payout, the figure has also increased from 10.8 billion in 2018 to RM11.9 billion, up by 10.19%. According to the chief executive officer of LIAM, Mark O’Dell, medical and health insurance is the highest category of claims, making up 41% of the claims paid. This amounted to RM4.94 billion, which is an increase of 20.82% from RM4.09 billion in 2018.
Going forward, LIAM believes that the industry can hit a high single-digit growth, despite the negative economic impact brought on by the Covid-19 pandemic. It believes that this is possible given the strong resilience of the industry and the low insurance penetration rate in Malaysia.