The Malaysian general insurance industry is set to grow at a compound annual growth rate (CAGR) of 7.8% from MYR22.6 billion ($5.0 billion) in 2024 to MYR30.5 billion ($6.8 billion) in 2028, in terms of direct written premiums (DWP), forecasts GlobalData, a leading data and analytics company.

GlobalData’s Insurance Database reveals that the general insurance industry in Malaysia is expected to grow by 8.3% in 2024, supported by motor and property insurance lines that are expected to account for 73% of the general insurance DWP in 2024.

Sneha Verma, Insurance Analyst at GlobalData, comments: “Malaysian general insurance industry witnessed slower growth of 7.5% in 2023 as compared to 10.0% growth in 2022, due to slower economic growth and tight monetary policy. The growth momentum is expected to rebound in 2024, supported by an increase in premium rates across general insurance lines driven by rising claims and high inflation, as well as heightened demand for natural catastrophe (nat-cat) insurance policies due to an increase in the frequency of extreme weather events.”

Motor insurance is the leading line of business in the Malaysian general insurance industry, estimated to account for a 46.9% share of the general insurance DWP in 2024. Motor insurance is expected to grow by 8.9% in 2024, supported by an increase in vehicle sales. As per the Malaysian Automotive Association (MAA), total vehicle sales reached 202,245 units in the first quarter of 2024, an increase of 5% from 192,615 units during the same period in 2023.

Verma adds: “Rising claims due to the increasing number of road accidents will prompt insurers to reassess their risk exposure and increase premium rates in 2024, which will support motor insurance growth.”

As per the Traffic Investigation and Enforcement Department in Malaysia, traffic accident cases increased by 10% in 2023 to 598,635 cases from 545,588 cases in 2022, and the number of fatalities increased by 104% to 12,417 in 2023 from 6,080 fatalities in 2022.

As a result, the average motor insurance claims paid per day increased to RM15.1 million in 2023 from RM13.4 million in 2022, which is the highest during the last five years, according to the General Insurance Association of Malaysia (PIAM). Motor insurance is expected to grow at a CAGR of 7.5% during 2024-2028.

Property insurance is the second largest line, estimated to account for a 26.4% share of the general insurance DWP in 2024. It is expected to grow by 11.4% in 2024, supported by increased demand for nat-cat insurance policies. According to PIAM, the recent surge in torrential rain across various states in Malaysia has increased the demand for fire insurance with flood coverage by 33% in the first half of 2023, an increase of 2% as compared to 31% during the same period in 2022.

Rising premium prices due to higher claims and inflation will also support the growth of property insurance. According to the Department of Statistics Malaysia (DOSM), total losses due to floods increased by 21% in 2023 amounting to RM755.4 million as compared to RM622.2 million in 2022. This is expected to increase the premium rates in 2024 and support property insurance to register a CAGR of 9.8% during 2024-2028.

Personal Accident and Health (PA&H) insurance is the third largest line, estimated to account for a 10.1% share of general insurance DWP in 2024. PA&H insurance is expected to grow by 0.3% in 2024, driven by increasing health awareness and medical inflation, leading to higher demand for health insurance policies. PA&H insurance is expected to grow at a CAGR of 3.1% during 2024-28.

Liability, Miscellaneous, and Marine, Aviation, and Transit (MAT) insurance is expected to account for the remaining 16.6% share of the general insurance DWP in 2024.

Verma concludes: “Economic recovery, rising consumer awareness of insurance, and the recovery of vehicle sales will support growth in the Malaysian general insurance industry over the next five years. Persistent high claim payouts led by medical inflation, and the occurrence of regular nat-cat events will prompt insurers to reassess their risk exposure and increase premium rates in the short term.”