KUALA LUMPUR, Dec 8 — Malaysia’s general insurance sector ends 2025 with resilience and underlying fragility.

The industry has reported steady premium expansion and stronger underwriting results, but it has also exhibited persistent weaknesses involving motor losses, rising repair costs and climate-linked risks.

Overall performance is nonetheless stable, but underlying currents suggest that deeper adjustments are needed to increase resilience as the industry heads into 2026.

Moderate growth

Industry data provided by the General Insurance Association of Malaysia (PIAM) to Bernama shows that overall gross written premium (GWP) for the first half of 2025 rose four per cent to RM12.3 billion from RM11.8 billion in the same period last year.

Underwriting profit strengthened by RM153 million to reach RM629 million, reflecting stronger cost discipline and healthy performance in several major portfolios.

Fire, personal accident (PA) and marine, aviation and transit (MAT) emerge as the most stable segments in 2025.

Fire, the second-largest line of business, grew 10.4 per cent to RM2.6 billion, maintaining a combined ratio of 67.3 per cent, meaning for every RM1 of premium collected, 67.3 sen were spent on claims and operating costs. 

PA expanded 11.2 per cent to RM800 million. MAT also remained profitable, cushioning weaknesses in other parts of the industry.

These gains, however, were offset by continuing pressure from the motor segment.

Motor insurance 

Motor insurance has remained the largest portfolio with 42.8 per cent of total premiums, but continues to weaken overall underwriting performance.

The segment grew 5.7 per cent against eight per cent in 2024.

More significantly, it continues to operate at a loss. The combined ratio remains at 102.2 per cent, which indicates that claims and operating costs exceed premium income.

The segment is weighed down by entrenched pressures as road accident rates continue to rise to 115 cases per 100,000 population, a trend since 2022. This is driving higher claims volumes and complicating efforts to stabilise motor insurance pricing.

Repair costs continue to climb. Spare parts inflation has been rising at an annual compounded rate of 10 per cent since 2021, making vehicle components one of the fastest-growing categories of claims expenditure and pushing the segment further into loss-making territory.

Flood losses

Flood-related claims are less frequent than motor accidents, but their severity remains a major concern for insurers.

The industry continues to cite the 2021-2022 floods in Malaysia as a reference point for risk planning, given that the tragedy saw losses of between RM5.5 billion and RM6.5 billion and displaced more than 40,000 people. Despite this, flood insurance penetration remains low.

According to PIAM, flood extensions, which can be added to fire coverage, can cost as little as RM14 per month. And special perils cover, an optional add-on for motor insurance, typically accounts for only 0.5 per cent of the sum insured.

Affordability is not the main barrier, but the take-up rate remains limited. This leaves many households and businesses vulnerable to climate-driven disasters.

Digitalisation progress, adoption uneven

Notable progress was made in 2025 with regard to digital solutions, with adoption varying across insurers. The e-police reporting (ePR) pilot was launched on Sept 1 2025, on the North-South PLUS Highway.

This enables motorists to file police reports for minor accidents online. In all, 328 reports were lodged via the platform by Nov 30, 2025. 

Insurers also expanded the use of digital roadside assistance (DRA) applications, allowing policyholders to request towing services and track claims digitally.

These tools improve customer experience and operational efficiency, but full-scale adoption has been gradual; industry-wide impact will take time to materialise.

Vouchers for lower-income group

The Perlindungan Tenang Voucher programme, a government initiative providing subsidised vouchers to help the lower-income to buy basic insurance or takaful protection, remains a key channel offering protection.

Participation throughout 2025 has reinforced its role in widening access to basic insurance coverage.

Insurers also deepen their focus on electric vehicle (EV) risk research as EV adoption introduces new repair cost structures and risk exposures.

Insurers recognise that motor risk profiles will shift over time as EV numbers grow, making product development and data-driven analysis essential priorities.

2026 priorities

PIAM has outlined several priorities for 2026. This includes talent development via the General Insurance Internship for Talent (GIIFT) programme, stronger consumer education initiatives and tools such as a building cost calculator to address under-insurance in property coverage.

Two broader challenges are also shaping the 2026 outlook - the major financial and safety risk from the rising number of uninsured motorcycles, and the need to build stronger climate resilience.

Insurers have reiterated support for climate science and plan to enhance risk management and underwriting practices to better absorb climate-related shocks.

All things considered, 2025 has been a stable year for Malaysia’s general insurance sector, supported by growth in key segments and gradual advances in digitalisation.

Nonetheless, persistent losses in the motor segment and the growing impact of climate-linked events have highlighted unresolved structural issues.

The industry is beginning to pivot towards solutions that involve operational efficiency, digital adoption, financial inclusion and EV readiness.

Whether these efforts are adequate to address deeper vulnerabilities will become clearer in 2026, a year that is likely to test the industry’s ability to transition from managing pressures to building long-term resilience. — Bernama