By Siti Noor Afera Abu
KUALA LUMPUR, Dec 16 -- Entering the second year of the unprecedented pandemic, COVID-19 has led to increased awareness to have insurance protection among Malaysians as well as safety nets in times of uncertainty.
Life Insurance Association of Malaysia (LIAM) chief executive officer Mark O'Dell said the current pandemic era will remind people how uncertain life can be and the importance of providing financial protection for the family in the event of a death or illness of the family breadwinner.
“Today, more Malaysians are aware of the importance of social protection for themselves and their loved ones and the pandemic is a wake-up call for them to take action and get life insurance protection,” he told Bernama.
O’Dell said the life insurance industry recorded a healthy growth of 12.9 per cent in new business total premiums or RM9.2 billion from January to September 2021 from RM8.2 billion during the same period last year.
In terms of the number of new policies, it registered 33.2 per cent growth as compared to the same period in 2020, while the number of agents as at Sept 30, 2021 also increased to 85,835 agents from 76,364 agents in 2020.
He said the number of new individual policies recorded a significant increase to 611,295 policies in 2021 from 412,215 policies in 2020.
“This means that the public is aware of the importance of purchasing life insurance, even though they are purchasing in smaller plans.
“This could be due to the COVID-19 pandemic where people are more prudent in their spending and at the same time do not ignore the importance of having financial protection for themselves and their loved ones,” O’Dell said.
Coverage targets among Malaysians and industry’s initiatives
According to reports, only 54 per cent of Malaysians have any form of insurance coverage.
Penetration rate as at 2020 is 56.1 per cent (insurance and takaful). After minusing policyholders with more than two policies, the rate reduces to 41 per cent.
At the national level as well as at the industry level, various initiatives have been taking place in recent months to ensure that all Malaysians particularly the B40 community are covered with insurance and takaful protection.
Among the initiatives announced by the government include the Perlindungan Tenang Voucher (PTV) programme to purchase life insurance and medical insurance protection.
The PTV programme, which was launched on Sept 30, 2021, is a national initiative by the government in collaboration with the insurance and takaful industry and offers social protection to about 8.4 million eligible Bantuan Prihatin Rakyat (BPR) recipients.
Under the PTV, a RM50 voucher is offered to eligible BPR recipients to purchase a Perlindungan Tenang protection plan from licensed insurers and takaful operators in the country.
The first phase of the programme was launched to 3.6 million BPR recipients from the household category on Sept 30, and the second phase was launched on Nov 15 to the single category (3.6 million recipients) and senior citizen category (1.1 million recipients).
To date, more than 437,000 vouchers have been redeemed with a value amounting to over RM21.8 million.
The PTV programme will be continued in 2022 with an increase in the voucher value to RM75 as announced in Budget 2022.
Overall profitability of insurance and takaful
LIAM said the growth in the industry was attributed to the increase in the investment-linked business from RM3.2 billion to RM4.5 billion, and the improvement in the performance of group policies to RM3.3 billion in the third quarter of 2021 (3Q21) from RM3.2 billion in 3Q20.
“However, traditional business had dropped by 24.6 per cent to RM1.4 billion from RM1.9 billion,” it said.
Despite the challenging business environment and the slowdown in the economy due to the COVID-19 pandemic, the life insurance industry achieved an encouraging growth in the investment-linked business.
The new business sum assured of Investment-linked policies rose by 22.95 per cent to RM86.5 billion from RM70.3 billion in 3Q20.
Nevertheless, the traditional policies new business sum assured fell by 15.7 per cent to RM14.3 billion from RM17 billion, as well as the group policies recorded a slight dip of 0.4 per cent to RM259.5 billion from RM260.6 billion.
Total sum assured for new business increased by 3.6 per cent to 360.2 billion from RM347.9 billion.
According to Bank Negara Malaysia (BNM), general insurance and takaful funds recorded a slight increase in operating profits to RM1.8 billion (1H20: RM1.7 billion), driven by better underwriting performance.
Higher premiums were also supported, to a lesser extent, by a recovery in the motor segment amid a rebound in car sales following the extension of the vehicle sales tax exemption, which is in place until December 2021, and the easing of containment measures prior to the movement restrictions, the central bank said.
However, the Malaysian takaful industry recorded strong growth in the Family Takaful and General Takaful businesses in 1H21 compared to the same period in 2020.
Malaysian Takaful Association (MTA) deputy chairman Mohamed Sabri Ramli stated that this could be seen from the total contributions of the Family Takaful business which increased 46.7 per cent in 1H21 to RM4.68 billion compared with RM3.19 billion in the same period last year.
Of this growth, 36.7 per cent rose from new business contributions.
Smooth sailing for insurers
As Malaysia gradually moves into the endemic phase of COVID-19 and with the reopening of more economic sectors, LIAM remains positive with the prospect of the industry in the coming year.
The industry will continue to work closely with the regulatory authorities and stakeholders in developing a progressive life insurance industry for the nation, it said.
The association noted that the life insurance industry remains committed and focused on pursuing its financial inclusion agenda and the national aspiration in increasing the penetration rate and narrowing the protection gap in the country.