Malaysia’s general insurance industry is expected to grow at a compound annual growth rate (CAGR) of 8.3%, from MYR19.4 billion ($4.4 billion) in 2022 to MYR28.9 billion ($6.6 billion) in 2027 in terms of direct written premiums (DWP), driven by growth in automobile sales and infrastructure development that will support motor and property insurance growth, according to GlobalData, a leading data and analytics company.

According to GlobalData’s Insurance Database, Malaysia’s general insurance industry is estimated to grow by 8.3% in 2023. Motor and property are the two largest insurance lines in Malaysia and collectively account for 71% of the general insurance premiums in 2022.

Sutirtha Dutta, Insurance Analyst at GlobalData, comments: “The general insurance industry in Malaysia grew by 10% in 2022, which is higher than the average growth during the last five years. The growth is attributed to increasing health awareness, the introduction of flood cover for property and motor lines, and an uptick in the output for the manufacturing and mining sectors, which has benefitted property insurance.”

Motor insurance is the largest general insurance line accounting for a 46.2% share in terms of DWP in 2022. According to the Malaysian Automotive Association, motor vehicle sales grew by 42% in 2022 as compared to 2021. The trend continued in 2023 as motor sales grew by 39% in February 2023 as compared to the same period during the previous year, which will support motor insurance growth. Motor insurance is expected to grow at a CAGR of 8.4% over 2022-27.

The National Economic Recovery Plan ‘Pelan Jana Semula Ekonomi Negara’ (PENJANA), implemented by the Malaysian government in 2020 to revive the country’s economy, also supported the growth of motor insurance. The plan provided a 100% sales tax exemption on the purchase of locally assembled vehicles and a 50% exemption on imported vehicles.

The tax exemption was effective until June 2022, however, the registration period for the purchase of vehicles was further extended to March 2023 owing to a shortage of semiconductors. According to the Ministry of Finance Malaysia, until June 2022, 868,422 units of vehicles were sold under this plan, leading to a positive impact on motor insurance growth.

Property insurance is the second largest line, accounting for a 24.6% share of the general insurance DWP in 2022. Property insurance is expected to grow by 6.7% in 2023, driven by an increase in residential and commercial construction activities.

Sutirtha adds: “The country’s high exposure to natural disasters during the last few years, especially floods, has played a pivotal role in increasing consumer awareness of property insurance. Reacting to the increasing demand, insurers are providing flood coverage under comprehensive fire policies, which will support property insurance growth. Property insurance is expected to grow at a CAGR of 7.7% over 2022-27.”

Personal Accident and Health (PA&H) insurance is the third-largest line, accounting for a 12.4% share of the general insurance DWP in 2022. The growth in PA&H insurance will be supported by rising medical inflation that will prompt insurers to raise premiums to cover their costs. Further, increasing health awareness will also support the demand for health policies in the country. As a result, PA&H insurance is expected to grow at a CAGR of 8.8% over 2022-27.

Liability, miscellaneous, and marine, aviation, and transit (MAT) insurance accounted for the remaining 16.8% share of DWP in 2022.

Sutirtha concludes: “Large-scale infrastructure projects, rising automobile sales, and high medical inflation will support the growth of Malaysia’s general insurance industry, which is witnessing a turnaround and is forecasted to grow at a faster pace over the next five years.”