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Kuala Lumpur, 23 Aug 2017 – The general insurance industry declined 1.9% for the first half of 2017 compared to the same period last year. Gross written premium income stood at RM9.17 billion a reduction from RM9.34 billion for the first six months of 2016.
Overall the industry recorded a mixed bag performance across all business lines. While the two dominant classes of Motor and Fire insurance grew 1.8% (RM4.2 billion) and 2.4% (RM1.8 billion) respectively, the industry was weighed down by the sharp drop of 13.2% in Marine Aviation and Transit (MAT) insurance from RM944 million to RM820 million. The depressed state of the Oil & Gas industry and a weak aviation sector were the main contributing factors to the poor MAT results.
Personal Accident (PA) insurance declined 12.5% from RM696 million to RM608 million, while Medical and Health insurance (MHI) grew 7.1% with gross written premiums reaching RM628 million. The Miscellaneous class comprising Bonds, Liabilities, Engineering and Workmen’s Compensation registered a decline of 9.7% with gross written premiums of RM1.13 billion.
On insurance claims, the industry continued to experience a deteriorating trend with the Net Claims Incurred Ratio increasing from 53.8% in the first six months of 2016 to 57.4% for the corresponding period in 2017. Out of this, Motor as well as Medical and Health insurance recorded the highest percentages at 71.4% (from 65.0%) and 71.8% (from 67.2%) respectively.
Motor insurance claims paid out by insurers amounted to RM2.68 billion in the first half of 2017. On a per day basis, insurance companies paid out a staggering RM14.7 million in claims for property damage, bodily injury and vehicle theft.
The high frequency and severity of road accidents in the country pose a major concern to the industry. In 2016 alone, a total of 7,152 people were killed in road accidents in Malaysia representing a 7% increase over road accident fatalities in 2015. The number of traffic accidents recorded in 2016 also increased by 7% to 521,466 compared to 489,606 accidents in 2015.
PIAM has consistently promoted safe driving through its various campaigns held during the General Insurance Day commemoration and other public events. Recently, PIAM signed a Memorandum of Understanding with the Malaysian Institute of Road Safety Research (MIROS) to strengthen collaboration on vehicle and road safety initiatives for the benefit of all road users.
At the national level, PIAM has set up the Accident Assist Call Centre (AACC) to help motorists when they meet with accidents. This is a toll-free 24/7 nationwide hotline 1800-221188 which arranges for emergency roadside assistance like towing services and also provides information on insurance claims enquires. AACC offers peace of mind to all road users and prevents any unwanted third party intervention which can confuse or take advantage of victims at the scene of an accident. This service is now supplemented with a parallel hotline number 15-500.
Although every effort is made to ensure the public is aware of road safety, the role played by the law enforcement agency is extremely important. In this regard PIAM fully supports the Kejara System which was introduced in April this year. The demerit point system will compel drivers to exercise more care when driving on the roads.
Motor vehicle theft counts continue to decline. The first six months of 2017 saw a decrease of 25% in motor vehicle thefts. The total number of stolen vehicles for all classes amounted to 7,897 a significant reduction from 10,551 for the first half of 2016. PIAM would like to commend the Police (PDRM), Customs and the law-enforcement agencies for their steadfast commitment and collaborative efforts working closely with the Vehicle Theft Reduction Council (VTREC) established by the industry. VTREC is a multi-stakeholder platform comprising governmental agencies and the insurance companies working together to eradicate vehicle theft nationwide.
In another major effort, the industry is taking concrete steps to combat insurance fraud and inflated claims plaguing the motor insurance business. An industry wide Fraud Intelligence System (FIS) will be launched soon. FIS will deploy the latest data analytics technology to detect fraudulent claims when a claim is first submitted to an insurance company. The system will help expose fraud syndicates at work and provide leads for investigations by insurance companies eventually leading to their prosecution by law enforcement authorities.
PIAM Chairman Antony Lee said “The general insurance industry is transitioning positively to-date into a liberalized environment for the motor and fire classes by adopting a phased approach. The policy intention is to enable insurers and consumers to adapt to the changes gradually given the increase in competition and innovation in the market. In this way, we can maintain order and preserve the stability and soundness of the industry”.
Since 1 July 2017 insurance premiums for Motor Comprehensive and Motor Third Party Fire and Theft products have been liberalized where pricing will be determined by individual insurers. PIAM’s national consumer education campaign is in full swing to heighten public awareness and understanding on the benefits of liberalization. With the phased liberalization motor premiums will take into account broader risk factors that will drive fairer pricing at competitive prices. Good drivers will be rewarded while bad risks drivers with poor driving record and traffic violations will be recognized.
PIAM CEO Mark Lim added that consumers can make a difference by being aware of their insurance needs and risk profiles. In this way they can make informed decisions given the wide choice of products available. They should shop around for the products that would best serve their needs. In line with this PIAM has launched a “Motor Product Selector” feature on its website with links to all insurers. This online platform provides consumers with key information on the insurance covers available and connects them directly with the insurance companies. Consumers can select the products they wish to purchase from the insurer of their choice and request for quotations at their convenience.
On human capital and talent attraction, PIAM’s General Insurance Internship for Talent (GIIFT) project which was launched in July 2015 has achieved commendable results. A total of 185 university undergraduates of various study disciplines are completing or have completed their 3-months internship at the member companies. These young interns are presented with a first-hand look of the industry. So far 30 of them have joined the industry upon graduation. More are expected to choose general insurance as their career of choice when they graduate.
Looking ahead PIAM expects a challenging year with the prevailing uncertainties in the business climate. Barring a robust upturn in the external environment for the second half, industry growth in 2017 is likely to stagnate.