LIAM Lauds the Launch of i-Lindung and urges the Government to open up to more life insurers for enhanced social protection amongst Malaysians
Kuala Lumpur, 15 July 2022 – Life Insurance Association of Malaysia (LIAM) lauds the efforts by the Government and the Employee Provident Fund (EPF) in launching the i-Lindung platform to enhance long term social protection amongst the rakyat.
The Government’s decision to allow EPF members to utilize EPF Account 2 to purchase life insurance and medical and health insurance including critical illness would help members augment their EPF savings to provide financial protection for themselves and their family in times of need and to provide better long-term protection.
According to LIAM President, Loh Guat Lan, the i-Lindung platform is a noble initiative by the Government together with EPF, which augurs well for the promotion of financial inclusion to encourage more Malaysians to take up insurance protection to fulfil their protection needs.
“We also urge the Government to open up the i-Lindung platform to more life insurance operators in the country by offering more products to suit the needs of the rakyat and to offer benefits to more consumers in the country.”
“The i-Lindung social protection initiative will not only pave the way in increasing insurance penetration rate, but also extending the insurance safety net to as many Malaysians as possible which is in line with the national agenda. Through an enhanced social protection, it will ensure comfortable living conditions for the community throughout their lives.”
“i-Lindung complements many other caring initiatives implemented by the Government for the rakyat in promoting financial resilience among the targeted segments through higher take up of insurance and takaful cover. Every individual should be made aware of the benefits of insurance and takaful protection to protect them against key risks in life such as critical illness, accident, total permanent disability or even death. This is very important particularly for those who are self-employed and have a family to take care, especially if they are the sole breadwinner.”
Enhancing the well-being of the rakyat by improving the insurance penetration rate across all income groups is part of the industry’s aspiration in addressing the current state of the insurance penetration rate in the country.
The current insurance and takaful penetration rate in the country is about 56.1% compared to developed countries with 100 percent. If we take into account policyholders with multiple policies, the percentage is reduced to 41%; which means only 4 out of 10 Malaysians have life insurance. Out of this, only 4% of households in the lower-income group has some form of life insurance/takaful cover.
Among those who do have some form of insurance protection, unfortunately they do not have sufficient coverage for themselves and their loved ones. The average sum assured in Malaysia is still in the region of RM50,000, which is grossly inadequate.
Based on the Protection Gap Study undertaken by Universiti Kebangsaan Malaysia and LIAM in 2013, there is still a huge protection gap for families with life insurance. On average, the gap ranges from RM100,000 to RM150,000 per family member. A family of 5 will need at least RM553,000 to survive for the next 5 years if the breadwinner is incapacitated or has passed away.
The low penetration rate of insurance and takaful among Malaysians is an issue that needs to be addressed and we hope with the launch of i-Lindung platform, it will fulfil the nation’s financial inclusion agenda of achieving higher insurance penetration and household resilience among the population.
The life insurance industry remains committed in pursuing its ongoing educational and awareness efforts for all level of the community. The launch of the Financial Sector Blueprint 2022-2026 by BNM is timely in setting the strategy for the development of the financial sector over the next five years.
“The industry has outlined a 5-year roadmap and strategies to achieve the desired targets set for the industry as outlined under the Blueprint. One the key priorities/ areas of focus is proactive strategies to increase the market penetration of life insurance ownership in Malaysia.
Moving forward, the industry will continue to be proactive in engaging very closely with BNM, government agencies and other key stakeholders to seek further guidance and input as we work on the industry’s Blueprint Implementation roadmap to materialise the desired outcomes and targets set for 2026.”
