Best’s Market Segment Report: AM Best Maintains Stable Outlook on Malaysia’s Non-Life Insurance Segment

AM Best is maintaining a stable outlook on Malaysia’s non-life insurance segment, citing sustained underwriting and pricing discipline, along with expected premium growth backed by regulatory reforms designed to increase insurance penetration.

The Best’s Market Segment Report, “Market Segment Outlook: Malaysia Non-Life Insurance,” states that the non-life sector is poised for significant growth, underpinned by economic recovery, rate hikes due to high inflation and rising claims and growing demand for digital insurance and takaful products. Additionally, Malaysia’s central bank and lead regulator has implemented various initiatives to improve non-life insurance penetration, which remains in the low single digits. Plans for 2026 include achieving an insurance/takaful penetration rate of 4.8-5.0% and doubling the number of individuals covered by microinsurance or microtakaful. The report notes that growth in general takaful contributions has consistently outpaced that of conventional insurance in recent years, a trend expected to continue over the medium term.

At the same time, Malaysia’s non-life insurers face rising climate-related risks, with more frequent severe weather events affecting underwriting performance. “An offset to the stable outlook is that the non-life industry remains susceptible to volatility stemming from the rising frequency of severe weather-related events, particularly in the fire line of business, and despite recent premium rate hikes on certain products following extreme flooding in 2021,” said Victoria Ohorodnyk, director, head of analytics, AM Best.

The continued de-tariffication of motor and fire insurance is expected to increase pressure on pricing over the near to medium term while strengthening the industry’s long-term sustainability, as well as drive product innovation.

“De-tariffication may produce volatile underwriting margins; however, Malaysia’s non-life insurers should maintain robust underwriting profits over the medium term through disciplined underwriting and pricing,” said Sin Yee Chuah, senior financial analyst, AM Best.

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=349929.

To view current Best’s Market Segment Outlooks, please visit http://www.ambest.com/ratings/RatingOutlook.asp.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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