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GENERAL INSURANCE INDUSTRY DECLINED 3.6% IN THE FIRST HALF OF 2020

Home| Latest News| GENERAL INSURANCE INDUSTRY DECLINED 3.6% IN THE FIRST HALF OF 2020

13
Aug, 2020
By PIAM
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Kuala Lumpur, 13 August 2020 – The General Insurance Industry registered its steepest half year drop in recent years as it bore the full brunt of the COVID-19 pandemic. Gross direct premiums declined 3.6% to RM 8.60 billion for the first six months of 2020 compared to the same period last year.

 

Motor the dominant insurance class was down significantly by 7.4% at RM 3.87 billion largely attributable to the more than 40% decrease in total vehicle sales for half year 2020. Personal Accident insurance recorded the largest fall of 13.4% to RM 522 million while Marine Aviation and Transit (MAT) insurance dipped 0.7% to RM 0.80 billion impacted by shrinkage of 9.0% and 8.7% in Cargo and Offshore Oil-related classes respectively. Fire insurance grew 2.2% to RM 1.76 billion while Medical and Health insurance notched up 3.0% to RM 586 million.

 

During this crisis, PIAM member companies have proactively ramped up measures to assist policyholders and lessen the financial burden of consumers. To answer Government’s call through the Ministry of Health, PIAM contributed RM 2 million to the insurance and takaful industry’s RM 8 million COVID-19 Test Fund. This was part of the industry’s effort to help affected rakyat cope with the immediate health effects of the virus and enabled more Malaysians to undergo the test to help contain community outbreak. In addition some of our member companies offered extra coverage for COVID-19 to their customers with no increase in premiums while some waived certain exclusions on medical policies where the pandemic was concerned. Some insurers were also supportive to cancel travel insurance policies with full refund of premiums. General insurers are reviewing the financial impact faced by consumers making the necessary adjustments on a case by case basis and exploring options to ensure insurance protection continues to be available to them under these trying circumstances.

 

Despite the significant reduction in traffic movements nationwide during the MCO and its extended duration, total motor claims paid out by insurers remained high at RM 2.4 billion for the first half of the year. The alarming incidence of road accidents in Malaysia poses a serious concern to the industry. Based on statistics published by the Ministry of Transport, a total of 567,516 accidents were recorded in 2019 (2018: 548,598 accidents; 2017: 533,875 accidents; 2016: 521,466 accidents and 2015: 489,606 accidents). The number of accidents went up by 16% over a five-year period from 2015.

 

PIAM Chairman, Antony Lee said, “A complete mindset change is required to transform the driving habits of Malaysian motorists. High risk drivers with their dangerous driving behaviour affect public safety in the same way as drink-drive motorists. Their risky and irresponsible driving behaviour should be recognised with higher insurance premiums. Good and safe drivers should not be subsidising the bad drivers. The time for the change is now. PIAM will intensify its collaborative efforts with the Ministry of Transport, JPJ, PDRM and all stakeholders to reduce road accidents in the country. The industry eagerly awaits the full liberalisation of the motor insurance tariff by Bank Negara Malaysia which will pave the way for a risk based pricing model for motor insurance premiums.”

 

The general insurance industry continues to provide emergency assistance and peace of mind to road users through the Accident Assist Call Centre (AACC). Launched in 2013 the AACC dedicated toll-free hotline 15-500 operates 24/7 nationwide offering immediate roadside assistance to the general public – whether in a road accident or a vehicle breakdown situation.

 

On a brighter note CEO Mark Lim highlighted that “There were less vehicles stolen for the seventh straight year which is a record in itself. The total number of stolen vehicles went down by 39% from 5,512 to 3,340 vehicles for all classes during the first half of 2020 compared to the same period last year. PIAM and the Vehicle Theft Reduction Council of Malaysia Berhad commend the unrelenting efforts, commitment and hard work of the Police (PDRM), Customs and all law-enforcement agencies for the outstanding results in combating vehicle theft in the country.”

 

Looking ahead the business outlook will be extremely challenging given the COVID-19 pandemic which has yet to be fully played out. Deep uncertainties prevail in the external environment. The global economy is witnessing some of the biggest disruptions and unexpected financial pressures in these unprecedented times. PIAM expects the industry to decline further for the full year with the road to recovery a long and arduous one ahead.

 

~ END ~

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