LIAM Calls for Measures to Expand Insurance Protection and Strengthen Domestic Reinsurance Capacity in Budget 2027
(Issued by the Chief Executive Officer of Life Insurance Association of Malaysia, Mr Mark O’Dell in conjunction with the tabling of Budget 2027 by the Minister of Finance Malaysia scheduled on Friday, 9 October 2026)
KUALA LUMPUR, 24 September 2026 – With the upcoming tabling of Malaysia’s 2027 Budget by the Minister of Finance, YAB Dato’ Seri Anwar Ibrahim, the Life Insurance Association of Malaysia (LIAM has submitted its Budget 2027 proposals to the Government, calling for targeted measures to broaden insurance protection among Malaysian workers and strengthen the competitiveness and sustainability of Malaysia’s domestic reinsurance sector.
LIAM’s proposals focus on two key areas: the waiver of the 8% service tax on group employee insurance schemes and fair and neutral tax treatment for Malaysian-domiciled reinsurers.
Expanding Insurance Protection Through Group Insurance
LIAM is proposing that the Government exempt group employee insurance schemes from the 8% service tax to reduce the cost of providing employee insurance benefits and encourage more employers to provide and maintain coverage for their employees.
Based on published statistics, less than half of Malaysian workers are covered under the group employee insurance scheme, leaving a significant protection gap. This situation raises concerns, especially in ensuring that more Malaysian workers, particularly lower- and middle-income workers, benefit from affordable insurance protection.
The proposed exemption would help reduce the cost of employee benefits, particularly for small and medium enterprises (SMEs), while strengthening household financial resilience against unexpected financial burdens arising from events such as death, disability and medical expenses.
LIAM also believes that wider access to appropriate private healthcare coverage could complement the public healthcare system by enabling insured workers to seek treatment at private healthcare facilities where appropriate, thereby helping to ease pressure on public healthcare resources.
Strengthening Malaysia’s Domestic Reinsurance Sector
LIAM is also calling for a review of the prevailing tax treatment of Malaysian-domiciled reinsurers compared with foreign reinsurers providing reinsurance capacity to the Malaysian market.
A Malaysian-domiciled reinsurer is subject to Malaysian income tax on its reinsurance profits, while an offshore reinsurer without a permanent establishment (PE) in Malaysia may compete for the same Malaysian business without a corresponding Malaysian income tax liability.
This difference in tax treatment can result in different overall tax outcomes for reinsurers competing for the same Malaysian business and may affect the competitiveness of Malaysian-domiciled reinsurers.
A strong domestic reinsurance sector is important to Malaysia as it supports the retention of reinsurance capacity within the country, strengthens domestic risk-management capabilities and contributes to the resilience and development of the local insurance ecosystem.
LIAM is therefore proposing that the Government consider measures to promote greater tax neutrality and a more level playing field between Malaysian-domiciled and foreign reinsurers, while taking into account Malaysia’s broader tax policy objectives and international tax developments.
We hope these proposals will contribute to the Government’s broader objectives of strengthening social protection, financial inclusion and the resilience of Malaysia’s financial ecosystem. LIAM looks forward to continued engagement with the Government and relevant stakeholders in advancing these objectives.
