AM Best

Best’s Market Segment Report: AM Best Maintains Stable Outlook on Malaysia’s Non-Life Insurance Segment


Sin Yee Chuah
Senior Financial Analyst
+65 6303 5022

Victoria Ohorodnyk
Director, Analytics
+65 6303 5020

Christopher Sharkey
Associate Director, Public Relations
+65 6303 5022

Cynthia Ang
Senior Industry Research Analyst
+65 6303 5026


SINGAPORE - DECEMBER 19, 2023 08:04 AM (EST)
AM Best has maintained its outlook on Malaysia’s non-life insurance segment at stable, citing expectations of solid premium growth and the maintenance of underwriting and pricing discipline maintained amid the phased de-tariffication of motor and fire businesses.

The Best’s Market Segment Report, “Market Segment Outlook: Malaysia Non-Life Insurance,” states that total non-life gross premiums written in 2022 rose 11.7% year over year to MYR 24.5 billion (USD 5.3 billion), with 31% of the growth coming from the general takaful segment. The increase was attributed to the recovery in most lines of business, particularly motor, fire and personal accident, after the lifting of the pandemic-related measures. Over the near to medium term, premium growth will be supported by sustained economic recovery and increased insurance penetration due to government initiatives, greater awareness of the importance of insurance protection and the growing demand for digital insurance and takaful products. AM Best also notes that since implementation of the phased de-tariffication on these lines of business, Malaysia’s non-life segment has seen an uptick in pricing competition, which is likely to pressure pricing over the near to medium term; however, in the long term, de-tariffication is seen as helping to strengthen the sustainability of the insurance industry.

Extreme weather events such as floods have hampered the non-life insurers’ profitability in recent periods, according to the report. Additionally, the higher cost of reinsurance and tighter underwriting terms and conditions have remained material factors during the country’s recent reinsurance renewal periods. AM Best expects non-life insurers to continue to implement premium rate increases for certain flood-related products and adopt prudent underwriting practices to mitigate the risk.

The report also notes ongoing consolidation and regulatory shifts to bolster the market. Consolidation has been driven mainly by larger international players seizing on acquisition opportunities, and this trend is likely to continue as global insurers seeking geographical diversification see potential in expanding to Malaysia owing to the country’s low insurance penetration rate and to the profitability of this market.

“International groups have not been deterred by foreign ownership regulations, which require foreign insurers to either reduce their stakes to no more than 70% in their local ventures or contribute to a charitable fund by the end of 2023,” said Sin Yee Chuah, senior financial analyst, AM Best. “Foreign insurers are likely to contribute to the charitable fund instead of reducing their ownership stakes, given the diversification benefits that Malaysia’s insurance industry offers, as well as the market’s technical profitability and growth potential.”

Additionally, all non-life insurers, including takaful operators, in Malaysia have implemented the Malaysian Financial Reporting Standard (MFRS) 17, equivalent to IFRS 17, which came into force on 1 January 2023. Overall, the new reporting standard is expected to provide more transparency and comparability, given the standardisation of accounting and the disclosure of financial statements.

To access the full copy of this report, please visit .

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.