Life Insurance Industry continues to play an important role in providing insurance protection for Malaysians
The industry is on the right track towards its transformation agenda, supported by key initiatives under the LIFE Framework.
Kuala Lumpur, Wednesday, 14 February 2018 - The life insurance industry continues with an upward trend in 2017 with higher insurance protection for Malaysians, providing insurance coverage amounting to RM1.38 trillion in sum assured for all policies combined in 2017. This amount is 6.0% higher than the corresponding figure of RM1.3 trillion in 2016.
Sum Assured
|
Type |
2016 |
2017 |
Difference |
Growth |
|
Traditional |
341,442,701,192 |
336,091,900,260 |
(5,350,800,932) |
-1.6% |
|
Investment -Linked |
440,278,367,250 |
527,320,693,482 |
87,042,326,232 |
19.8% |
|
Group |
518,115,555,078 |
514,483,339,847 |
(3,632,215,231) |
0.7% |
|
TOTAL |
1,299,836,623,520 |
1,377,895,933,589 |
78,059,310,069 |
6.0% |
The healthy performance of the life insurance industry reflects the continued increase in awareness among Malaysians on the importance of insurance protection.
As a whole, the life insurance industry provided insurance protection to 12.6 million lives (counting lives with multiple policies as separate lives) in 2017, a marginal increase of 11,978 lives compared with year 2016.
Number of Policies
|
Type |
2016 |
2017 |
Difference |
Growth |
|
Traditional |
8,003,614 |
7,665,075 |
(338,539) |
-4.2% |
|
Investment -Linked |
4,533,941 |
4,884,068 |
350,127 |
7.7% |
|
Annuity |
96,147 |
96,537 |
390 |
0.4% |
|
TOTAL |
12,633,702 |
12,645,680 |
11,978 |
0.1% |
The per capita sum assured also increased from RM41,055 in 2016 to RM42,992 in 2017.
However, the per capita sum assured of RM42,992 is still way below the amount needed to support one family member in the event of the death or disability of the breadwinner. Based on 2012 Underinsurance Study in Malaysia undertaken by University Kebangsaan Malaysia and LIAM in 2013, the average mortality gap for each member of a family is about RM100,000 to RM150,000.
Sum Assured per Capita
|
|
2016 |
2017 |
|
Total Sum Assured |
1,299,836,623,520 |
1,377,895,933,589 |
|
Population |
31,660,700 |
32,049,700 |
|
Sum Assured per Capita |
41,055 |
42,992 |
On new business total premium, the industry grew 3.8% in 2017 with total premium volume recording RM10,119 billion.
New Business - Total Premiums
|
|
January to December |
||
|
2016 |
2017 |
Growth |
|
|
Individual |
|
|
|
|
- Traditional |
3,026 |
2,227 |
-26.4% |
|
- Investment -linked |
3,661 |
4,652 |
27.1% |
|
Group |
3,059 |
3,240 |
5.9% |
|
Total |
9,746 |
10,119 |
3.8% |
Based on New Business Annual Premium Equivalent ( measured by 10% of Single Premium and 100% Annualised Premium), the life insurance industry grew by 1.9% to RM5.82 billion (2016 : 16.2%).
In terms of individual business, investment-linked business performed much favourably compared to traditional policies. Investment-linked business recorded an increase of 19.4% in 2017 ( 2016 : 16.4%) while traditional business recorded a negative growth of -22.0% (2016: 20.0%). Group policies maintained a stable growth of 4.9% (2016: 4.8%).
New Business - Annual Premium Equivalent
|
|
January to December |
||
|
2016 |
2017 |
Growth |
|
|
Individual |
|
|
|
|
- Traditional |
2,290 |
1,786 |
-22.0% |
|
- Investment -linked |
3,074 |
3,670 |
19.4% |
|
Group |
348 |
365 |
4.9% |
|
Individual + Group |
5,712 |
5,821 |
1.9% |
Total in-force premiums in 2017 recorded a slight increase of 3.3% to RM36.6 billion.
In-Force Premiums
|
|
January to December |
||
|
2016 |
2017 |
Growth |
|
|
- Traditional |
18,049 |
16,775 |
-7.1% |
|
- Investment -linked |
13,959 |
16,406 |
17.5% |
|
- Annuity Group |
501 |
510 |
1.8% |
|
Group |
2,927 |
2,929 |
0.1% |
|
Total |
35,436 |
36,620 |
3.3% |
The life insurance industry also registered an increase of 5.3% in claims amounting to RM10.1 billion as compared to RM9.7 billion in 2016. The growth in claims payments was contributed mainly by higher death and disability claims.
The increase in healthcare costs is a major concern in the industry as companies try to keep the healthcare premium affordable for all. Among the efforts undertaken by the industry to manage the rising medical costs include working closely with various stakeholders to ensure that the healthcare premiums continue to be maintained at an affordable level, proposing to request that private hospitals on insurers’ panel to publish their charges on common surgeries and treatments, standardise their billing format to enhance the efficiency of keeping tabs on claims amounts and work with healthcare providers to ensure that medical treatments are charged at fair prices and treatments recommended are clinically indicated.
Claims Payment
|
Benefit |
2016 |
2017 |
Difference |
Growth |
|
Death |
1,222,411,558 |
1,336,279,422 |
113,867,864 |
9.3% |
|
Disability |
85,868,248 |
116,338,752 |
30,470,504 |
35.5% |
|
Medical |
3,408,176,898 |
3,660,715,515 |
252,538,617 |
7.4% |
|
Bonuses |
3,577,266,832 |
3,635,523,002 |
58,256,170 |
1.6% |
|
Others |
1,364,276,198 |
1,419,470,204 |
55,194,006 |
4.0% |
|
TOTAL |
9,657,999,734 |
10,168,326,895 |
510,327,161 |
5.3% |
Outlook
According to the President of LIAM, Mr. Toi See Jong, the outlook and prospect of the life insurance sector remains positive as the percentage of population with life insurance or takaful plans is still low at 54%. Taking into account policyholders with more than one life or takaful policies, only 34 out of 100 people are insured.
In response to this challenge, Bank Negara Malaysia together with LIAM, the Malaysian Takaful Association and Persatuan Insurans Am Malaysia came up with a bold and noble initiative in November 2017 to launch an affordable insurance scheme “Perlindungan Tenang – Mampu & Mudah”.
Riding on 3 basic criteria of being Affordable, Accessible and Simple, Perlindungan Tenang is sold by six life insurance companies. Through the basic protection provided under Perlindungan Tenang initiative, Malaysians can now protect themselves and families (against key risks in life) with premiums/contribution from only a few ringgit per month.
In July 2017, significant developments have been made to offer life insurance via on-line /internet channels and direct walk-in. The introduction of easy, hassle-free distribution channels is to make life insurance purchase simple and quick.
The life insurance industry also introduced a more comprehensive Customer Service Charter (CSC) in December 2017. Aimed at underscoring the insurers’ commitment to deliver a consistent high standard of customer service, the revised Charter has introduced certain minimum industry standards with regard to turnaround times for specified services. With the new CSC in place, the industry is set to provide better customer experience and satisfaction, gaining their trusts and reducing the number of complaints.
Effective January 2018, the Balanced Scorecard (BSC) for agents was introduced. Under the BSC framework, a proportion of agents remuneration will be dependant on a number of factors such as persistency, professionalism, advice given to customers, good service etc. This will be a major transformation to the life insurance experience for policyholders.
