Despite the challenging economic environment, the Malaysian economy recorded a steady growth of 5.1% in 2011 (2010: 7.2%). This growth was achieved in an in creasingly challenging and volatile global environment. There were several natural disasters in the region that had severe impact on the economies of these countries and which also disrupted the global manufacturing supply chain. There continues to be uncertainty over the international reforms that are taking place in several major advanced economies and the implications on overall global economic growth.
Domestically, the services sector was the largest contributor of growth and it sustained expansion at 6.8% in 2011 (2010: 6.8%) to contribute to 3.9% of the overall Gross Domestic Product (GDP) growth. The finance and insurance sub-sectors expanded firmly following strong performance in bank lending and increased insurance premium income.
Domestic demand registered a steady growth of 8.2% in 2011 (2010: 6.3%) driven by both household and business spending. Headline inflation as measured by the annual percentage change in Consumer Price Index (CPI), averaged 3.2% in 2011 (2010: 1.7%).
The general insurance industry looks forward to a sustainable growth rate amidst what is generally expected to be a highly challenging global economic environment.
Key Figures of the General Insurance Industry, 2010/2011
As at 1st April 2012, the Association had 32 members comprising licensed general insurance and reinsurance companies operating in Malaysia. There were 18 general insurers, 8 composite insurers and 6 general reinsurers. Out of the 32 member companies, 17 were domestic operations whilst 15 were foreign owned.
General Insurance Business Performance
The general insurance industry registered positive growth in 2011 amidst global economic uncertainty and huge catastrophic losses experienced in the region. Gross written premium showed a growth of 7.85% to reach RM14.029 billion, compared with an increase of 8.56% (RM13.009 billion) in 2010. Net premiums grew at a rate of 8.20% to reach RM9.718 billion.
The Motor and Fire classes of business recorded increases in gross written premiums with Motor recording written premiums of RM6.382 billion which was an increase of 6.93% over the previous year (2010: 5.2%, RM5.969 billion). The Fire class recorded a 4.67% increase to reach RM2.399 billion (2010: 2.4%, RM2.292 billion). Medical insurance received a 27.8% boost to reach RM0.822 billion compared to RM0.643 billion in 2010.
General Insurance Business Market Share
In terms of market share, the previous year’s trend in sectorial distribution of the total market share was generally maintained. The Motor sector dominated the market at 46.4%, which was a decrease of 0.7% from the previous year. The Fire sector’s share was reduced from 16.7% in 2010 to 16.5% in 2011. All the other sectors maintained their respective market shares.
Net Claims Incurred Ratios (NCIR) By Sectors
The overall Net Claims Incurred Ratio (NCIR) for general insurance business for 2011 increased from 60.3% in 2010 to 60.7%. The overall combined ratio also increased to 90.3% in 2011 compared to 89.8% in 2010.
The Motor NCIR showed a slight decrease in 2011 to 76.8% from 77.9% in 2010. The NCIR for Motor Act cover (i.e. cover for compulsory third party bodily injury and death liabilities), however, escalated further this year to 287.5% compared to 271.2% in 2010. The industry also experienced notable NCIR increases in MAT which increased from 29.0% to 38.8%, CAR & ENG from 38.0% to 45.8%, Liability from 25.0% to 41.1% and Others which recorded 46.5% compared to 42.3% in 2010.
The general insurance industry recorded an underwriting margin of 9.8% amounting to RM1.266 billion in 2011 compared to 10.2% amounting to RM1.053 billion in 2010. With prudent underwriting and operational procedures in place, the combined management expenses and commissions ratio of insurance companies was maintained at 29.5% in 2011 as for the year before.