KUALA LUMPUR, March 14 — RAM Rating Services Bhd (RAM Ratings) is maintaining a stable outlook on the local insurance industry for this year with general insurance premiums expected to stay stagnant in view of the progressive impact of tariff liberalisation and as the country’s economic growth moderates.
It said life insurance new business premiums were only expected to chart a modest one to two per cent increase due to weaker consumer sentiment and rising cost of living concerns.
“General insurance premiums rose 1.8 per cent to RM17.6 billion in 2018 after a mild contraction the year before, supported by growth in the motor, as well as medical and personal accident segments.
“While fire premiums also saw an increase, future growth will be limited as competition intensifies in this high-margin segment,” it said in a statement today.
RAM Ratings said that a clearer picture of the impact of Bank Negara Malaysia’s liberalisation of motor and fire tariffs would emerge starting in 2019, three years after the reforms were first initiated.
“At this juncture, insurers’ pricing autonomy is still limited, although the regulator may consider further easing from 2019 onwards. Motor and fire insurance collectively accounted for 67 per cent of general insurance premiums in 2018,” it said.
RAM Ratings said that the life insurance segment’s new business premiums expanded at a slower pace of 1.8 per cent to RM10.3 billion in 2018 driven by an increase in group policies.
“New business growth may be constrained in the next few years as the industry adapts to new regulatory requirements for investment-linked business.
“Among others, the revised guidelines require sustainable premium pricing, sustainability tests of insurance coverage, and more conservative investment return illustrations in sales and marketing materials,” it added. — Bernama
