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Kuala Lumpur, 24 Aug 2016 – The general insurance industry recorded a moderate growth rate of 3% for the first six months of 2016, amidst earlier sentiments that it will be a challenging year for its members. Industry gross written premiums increased to RM9.34 billion compared to RM9.07 billion for the same period last year.
Motor insurance grew marginally by 0.7% and maintained its major share of the overall market at 44.1%. Motor premiums were RM4.12 billion in the first half of 2016 compared to RM4.09 billion for the same period in 2015.
Fire insurance the second largest class with a market share of 18.7% surged 8.9% to reach premiums of RM1.75 billion. Other strong performers include the Miscellaneous Class comprising Bonds, Liabilities, Engineering and Workmen’s Compensation which grew at a healthy 8.6% with premiums of RM1.24 billion. Medical and Health Insurance (MHI) increased by 1.9% with gross written premium of RM586 million while the Personal Accident class registered a growth of 0.9% with gross written premiums of RM696 million. Marine Aviation and Transit (MAT) insurance declined by 1.4% to RM944 million owing to the weak oil and energy sector and a 27.4% drop in marine hull insurance.
The overall Net Claims Incurred Ratio (NCIR) for the industry achieved a reduction from 56.7% in the first half of 2015 compared to 53.8% in 2016. Motor claims incurred ratio was 65.0% in 2016 compared to 74.3% for the same period last year.
The industry continues to incur high motor claims for the first half of 2016 amounting to RM2.41 billion. This equates to a staggering RM13.2 million per day paid out in motor claims for property damage, bodily injury and vehicle theft.
On a positive note the industry recorded a decline of 5% in motor theft counts. The total number of stolen vehicles for all classes in the first half of 2016 amounted to 11,796 compared with 12,412 in 2015. PIAM would like to commend the joint efforts by the Police (PDRM), Customs and other law-enforcement agencies for their steadfast commitment and proactive collaboration with the Vehicle Theft Reduction Council (VTREC).
The industry achieved a higher underwriting profit of RM836 million in the first half of 2016 compared to RM754 million in the same period of 2015.
PIAM Chairman, Antony Lee said “The general insurance industry is bracing itself for a significant change over the next 3 years. The Phased Liberalization of the Motor and Fire Tariffs announced by Bank Negara Malaysia will transform business models and the way insurers have been underwriting these two major classes which comprise 63% of the general insurance business in the country.”
Chief Executive Officer, Mark Lim said “In the first phase starting 1 July 2016, insurers will progressively introduce new motor and fire products, and price them at market rates. However such products will be subject to approval by PIAM on the policy wordings, definitions and terminologies. Subsequent approval from BNM on the pricing will be required before they are launched to the public. PIAM has established an Industry Product Review Board (IPREB) to fulfill this role.”
On human capital and talent development, PIAM’s General Insurance Internship for Talent (GIIFT) project which was launched industry-wide a year ago in July 2015 achieved commendable results. A total of 85 university undergraduates of various study disciplines successfully completed their 3-months internship at 22 member companies. The young interns relished the opportunity to experience at first-hand the operations of a general insurance company and the important role played by general insurance in risk management and mitigation. Given their positive experience they will consider general insurance as their career of choice upon their graduation.
Looking ahead PIAM expects the operating environment for the second half of 2016 to be as challenging as the first six months. Moderation in the growth rate is likely to prevail for the resilient general insurance industry.