AM Best: Regulatory Initiatives, Economic Expansion Drive Malaysia’s Non-Life Growth

KUALA LUMPUR, Sept 10 (Bernama) -- AM Best has maintained a stable outlook on Malaysia’s non-life insurance segment, citing regulatory initiatives and economic expansion, which are driving robust premium growth and increasing insurance penetration.

The stable outlook on Malaysia’s non-life segment is also supported by de-tariffication of motor and fire insurance, as well as measures curbing medical inflation. However, it remains vulnerable to developments in the external environment.

The Best’s Market Segment Report, “Market Segment Outlook: Malaysia Non-Life Insurance”, stated that motor and fire insurance anchor the market, together accounting for more than 65 per cent of total non-life premiums.

In a statement, the global credit rating agency said pricing has progressively shifted towards a more risk-based approach since phased liberalisation of tariffs for these lines began in July 2016. 

Over time, AM Best expects de-tariffication to drive product innovation, improve service quality, align pricing with underlying risks and enhance market efficiency, although it may pressure underwriting margins over the intermediate term.

“Malaysia’s non-life insurers continue to maintain healthy underwriting profits through disciplined underwriting and effective pricing strategies, supporting the industry’s long-term sustainability,” said AM Best senior financial analyst, Sin Yee Chuah, adding that the segment remains poised for continued growth.

The rating agency added that Malaysia’s non-life segment reported an improved underwriting profit in 2025, with a healthy combined ratio in the low-to-mid-90 per cent range, reflecting sustained underwriting discipline that supported profitability.

Malaysia’s economy continues to be supported by resilient domestic demand, particularly household consumption and investment, while strong demand for electrical and electronics exports and continued investment in data centres provide additional support.

The report also noted that a pilot phase of the recently introduced RESET Strategy, which introduced a standardised base medical and health insurance/takaful plan with a co-payment feature, is targeted for the second half of 2026, with full rollout expected by early 2027.

In addition, climate change is projected to increase the frequency and severity of extreme weather events, presenting floods as a persistent tail risk for insurers and exposing the segment’s profitability to greater volatility.

-- BERNAMA