KUALA LUMPUR: New business premiums in the life insurance and general insurance industry recorded double-digit growth in the first half of 2024 to more than RM20 billion, according to Bank Negara Malaysia governor Datuk Abdul Rasheed Ghaffour.
He said the family takaful and general takaful industry also showed growth to record total contributions of over RM7 billion.
“To realise our full economic potential, it is important that we remain resilient to shocks and disruptions and continue to put risk management at the top of our agenda. This is where insurance and takaful protection can play its part – one that will foster greater stability and resilience in our economy,” he said at the rebranding of Malaysian Insurance Institute to Asian Institute of Insurance today.
The rebranding of the institute reflects its ambition to lead insurance education and professional development across Asia.
Stating that the Malaysian insurance and takaful sectors are at a pivotal point, Abdul Rasheed said they have observed evolving trends and developments, part of the dynamic Asian region, with strong prospects and opportunities, that shape the nature of emerging risks facing businesses and consumers today.
He said these present both opportunities and challenges for the sector.
On the escalating frequency and severity of global risks that challenge traditional risk models, Abdul Rasheed remarked that they include climate change and cyber threats.
“Given the dynamic and often unpredictable nature of these emerging threats and their potential to cause widespread impact, conventional risk models that depend on historical data and established patterns for predicting and pricing risks may struggle to address them,” Abdul Rasheed said.
As is commonly the case, he added, the more complex the risk, the harder it is to model and predict.
“This in turn poses challenges to assess and underwrite such risks effectively. As a result, risk owners may end up facing higher premiums, more stringent underwriting or underinsurance.”
Abdul Rasheed said the impact will be most strongly felt by vulnerable populations, such as low-income individuals and small businesses – especially those in emerging economies – who will find it difficult to afford or access adequate coverage against climate-related risks such as floods and natural disasters.
Touching on the technological advancements and shifting customer expectations that demand adaptation and evolution of the insurance sector, he said: “The reality is that artificial intelligence, big data and robotics are reshaping the way we live, work and play in profound ways.”
Abdul Rasheed said as customers become increasingly accustomed to the responsiveness and convenience offered by technology in many aspects of their lives, their expectations will naturally extend to the insurance sector.
“Insurers are increasingly expected to provide a seamless experience, tailored to the specific needs of various types of covers. An inspiring innovation in this space is ‘parametric insurance’,” he added.
By eliminating much of the paperwork and manual processes associated with traditional insurance claims, parametric insurance can lead to faster payouts and resolution times, he pointed out.
“Leveraging on the increased availability of data, this speed and efficiency can have a decisive impact on livelihoods where immediate assistance is critical such as in events of natural disasters,” Abdul Rasheed said.
As to the rapid ageing of the population, he said that by 2044, 14% of Malaysia’s population is expected to be of those 65 years or older, making it an ‘aged society’.
“This so-called ‘silver tsunami’ phenomenon will see a shrinking share of the working age population supporting a growing share of the old-aged persons. This population segment is often underserved and demands specific needs such as healthcare, long-term care and financial security, but oftentimes have limited access to insurance due to lack of awareness, trust or affordability,” he said.
Abdul Rasheed said insurers and takaful operators will need to expand their capacity and readiness to narrow critical protection gaps and strengthen financial safety nets.
