AM Best Sustains Stable Outlook On Malaysia’s Non-life
AM Best Sustains Stable Outlook On Malaysia’s Non-life
Due to its strict underwriting guidelines and the market’s recovery from the economic effects of Covid-19, rating agency AM Best has had a stable perspective on the Malaysian non-life insurance industry segment.
The general takaful segment accounted for 44% of the growth in non-life gross written premium, which increased by 4.0% to $4.95 billion in 2021, according to the agency’s “Market Segment Outlook: Malaysia Non-Life Insurance.”
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The agency noted that this increase, which comes after a decline in non-life premiums in 2020, was caused by a resurgence in most business lines, particularly fire, engineering, and the expanding motor takaful sector.
AM Best anticipates that the segment’s growth will be aided in the short to medium term by the nation’s economic recovery and rising insurance penetration.
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The easing of long-standing COVID-19-related social and commercial constraints has helped the economy flourish again, but the increased use of digitalization has made it easier to subscribe to policies and is boosting insurance penetration.
AM Best Sustains Stable Outlook On Malaysia’s Non-life
According to the report, key lines of business, in particular motor and fire insurance, are expected to drive the growth of the non-life insurance segment.
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Following the end of movement restrictions and lock-downs, motor insurance business is likely to expand over the near term, supported by growing new vehicle sales.
Additionally, the risk of capital market volatility remains and is likely to be subject to the ongoing global development and management of the pandemic and deteriorating supply chain issues.
In response to these market conditions, AM Best expects non-life insurers to continue monitoring their underlying risk exposure to various investment classes, as well as actively adjust and refine their portfolio allocation as part of their risk management.
Susan Tan, financial analyst, AM Best, commented: “Given the hardening of reinsurance rates for fire coverage in recent periods, primary insurers have been moderately increasing the pricing for fire.
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AM Best Sustains Stable Outlook On Malaysia’s Non-life
“Price increases for the fire line peaked in the fourth quarter of 2021 following the December flood event in Malaysia.”
Kanika Thukral, senior financial analyst, AM Best, said: “As economic activity resumes with the easing of lock-down measures, a rise in claims frequency is likely to drive a contraction of underwriting profit.
“However, AM Best expects that non-life insurers in Malaysia will maintain underwriting and pricing discipline.”
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