Insurance sector -- positive but there may be bumps
The Malaysian insurance industry is expected to grow by at least 12 per cent in 2011. However, there remains an uncertain outlook in the western economies that could shape the performance of the industry.
"Some products hinge on the sentiments and the reactions of the local stock market, thus global indicators might affect consumer confidence as well. And with the expected continued low interest rate environment, prudent measures by the government might cut back projections of the sector further," said the Life Insurance Association of Malaysia (Liam)
Its president Md Adnan Md Zain, however, said various initiatives announced in the Economic Transformation Plan (ETP) such as a private pension plan, foreign workers' health insurance and an employee insurance scheme and the low penetration rate for life insurance, could significantly counter the possible setbacks.
Md Adnan said the best possible ways to overcome these external hindrances would be through prudent policies, active management, working closely with regulators and working closely as an industry.
As the industry liberalises further, Liam does not discount the emergence of new foreign life players that would invigorate the market and the continued acceleration of the financial inclusiveness programmes embarked by both the authorities and the financial institutions.
Meanwhile, the Malaysian Takaful Association (MTA) expects the Islamic insurance sector to continue to improve family takaful (the life insurance equivalent) penetration, mainly into the rural.
Hence, the emergence of four new takaful players (under the Financial Sector Masterplan) would heighten completion not only in capturing new market share but also in developing new products.
Just like the general insurers, the takaful business is highly correlated with economic activities and therefore the positive outlook of the domestic economy this year will affect the growth of both sectors.
"The significant growth in retail credit financing, especially in relation to home financing in 2010, may be curbed to some extent in 2011 and this should encourage takaful operators to diversify their business focus away from financing protection products to agency driven products," MTA chairman Datuk Syed Moheeb Syed Kamarulzaman said.
General Insurance Association of Malaysia (Piam) executive director Lim Chia Fook said the association expected the outlook for the general insurance sector this year to be positive with an increased demand for general insurance in all sectors.
The medical and health insurance (MHI) sector was expected to remain strong with growth to be driven by growing consumer awareness and increasing need for protection against escalating costs of medical and health care services, he noted.
Lim said the recently-announced medical insurance plan for foreign workers to be implemented early this year would add further impetus to the MHI sector.
Apart from further pick-up in demand for property and liability insurance, the automotive sector would provide the stimulus for growth in the motor insurance sector, he said.
He said Piam expected new areas of growth in micro-insurance products, especially in view of the fast developing small and medium enterprises sector as well as the biotechnology sector.
Its president Md Adnan Md Zain, however, said various initiatives announced in the Economic Transformation Plan (ETP) such as a private pension plan, foreign workers' health insurance and an employee insurance scheme and the low penetration rate for life insurance, could significantly counter the possible setbacks.
As the industry liberalises further, Liam does not discount the emergence of new foreign life players that would invigorate the market and the continued acceleration of the financial inclusiveness programmes embarked by both the authorities and the financial institutions.
Meanwhile, the Malaysian Takaful Association (MTA) expects the Islamic insurance sector to continue to improve family takaful (the life insurance equivalent) penetration, mainly into the rural.
Hence, the emergence of four new takaful players (under the Financial Sector Masterplan) would heighten completion not only in capturing new market share but also in developing new products.
Just like the general insurers, the takaful business is highly correlated with economic activities and therefore the positive outlook of the domestic economy this year will affect the growth of both sectors.
"The significant growth in retail credit financing, especially in relation to home financing in 2010, may be curbed to some extent in 2011 and this should encourage takaful operators to diversify their business focus away from financing protection products to agency driven products," MTA chairman Datuk Syed Moheeb Syed Kamarulzaman said.
General Insurance Association of Malaysia (Piam) executive director Lim Chia Fook said the association expected the outlook for the general insurance sector this year to be positive with an increased demand for general insurance in all sectors.
The medical and health insurance (MHI) sector was expected to remain strong with growth to be driven by growing consumer awareness and increasing need for protection against escalating costs of medical and health care services, he noted.
Lim said the recently-announced medical insurance plan for foreign workers to be implemented early this year would add further impetus to the MHI sector.
Apart from further pick-up in demand for property and liability insurance, the automotive sector would provide the stimulus for growth in the motor insurance sector, he said.
He said Piam expected new areas of growth in micro-insurance products, especially in view of the fast developing small and medium enterprises sector as well as the biotechnology sector.
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