AM Best has assigned a stable outlook to the Malaysian non-life insurance segment off of an expectation that underwriting discipline and robust pricing will be maintained in the face of ongoing phased de-tarrification of motor and fire business.
The rating agency also noted an increased use of digital solutions to enhance data and pricing capabilities, claims automation, product innovation and distribution.
Over the past several years, AM Best describes the Malaysia non-life insurance market, including general takaful, as having exhibited generally modest expansion, with a five-year average compound annual growth rate of 1.3% in terms of gross direct premium/takaful contributions (2016-2020).
The modest growth was closely aligned with the country’s GDP expansion over the same period, which typically remained in the low single digit range.
Although the non-life insurance penetration rate in the country was higher than many of its emerging Southeast Asia peers, it was still relatively low at 1.5% in 2020.
Nonetheless, AM Best says the market has made good progress in upgrading its infrastructure to enable minimal disruption in a remote working environment, as well as in expanding digital platforms to manage operations.
It’s also underlined how most of the country’s insurance companies now have an established framework and developed risk management guidelines to govern a digital-based remote working environment during periods of movement control orders (MCO), with business contingency plans set up.
Overall, AM Best expects the use of technical solutions, digital methods to interacting and transacting with policyholders, and more generally innovation, to feature high on the list of ongoing strategic considerations of non-life insurance executive management teams over the medium term.
