Life Insurance in Malaysia and 2022 Key Trends

Life insurance in Malaysia
Source: iMoney
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Life insurance in Malaysia has been seeing an upward trend for the past few years. Despite multiple issues such as low insurance penetration and a benign economic outlook, insurance continues to grow due to stable domestic consumption and sustained government spending.

Collaborative efforts and mutual sharing on knowledge by insurers has improved the overall insurance penetration in Malaysia and reduced the existing protection gap.

What Happened in 2020/2021?

  • Increase in insurance sales.
  • Increase in insurance claims.
  • Takaful insurance saw a better growth than conventional insurance.

Upward Trend in 2020/2021

Malaysia saw an increase in new business premiums and investment-linked policies when compared to 2016. There also was an increase in group policies and total insurance coverage amount.

Life insurance protection was offered to 12.6 million lives (one life with multiple policies) in 2017. The per capita sum assured for 2017 was increased to RM42,992 from RM41,055 in 2016.

Percentage of Increase and Growth in 2017

Categories Increase (2017) Aggregated Total (2017)
New Business Premiums 3.8% RM10.10 billion
Annual Premium Equivalent 1.9% RM5.52 billion
Investment-linked Insurance 19.4% RM3.67 billion
Group Policies 4.9% RM365 million
In-force Premiums 3.3% RM36.6 billion
Insurance Coverage 6.0% RM1.38 trillion

Claims in 2017

With the increase in life insurance policies rolled out, there has also been a corresponding increase in claims made on these policies 2017 as compared to 2016. The increase was around 5.3% amounting to a total of RM10.1 billion.

The majority of claims on these policies were for death and total and permanent disability.

Major Changes to Be Expected in 2022

The biggest change in 2021 in terms of life insurance could come in the form of changes in regulations concerning the operations of foreign insurers in Malaysia. With many reports of foreign insurers being directed to sell a 30% stake of their domestic business through strategic stake sales or through local initial public offerings may not sit well with foreign insurers.

However, BNM states that the directive isn’t a new one and that it is only to honor the commitments given by foreign insurers when they applied for entry into the Malaysian insurance market and must rationalise their stakes to comply with foreign ownership regulations.

With a relatively   population, insurance is bound to grow. Until now, foreign insurers such as Great Eastern Holdings, Prudential PLC, AIA group and Tokio Marine Holdings run the majority of life insurance business in Malaysia. If the latest rule of 70-30 ownership percentage is enforced, then Malaysia would see an increase in locally based insurers in 2021.

Local insurers would be state-owned entities such as Kumpulan Wang Persaraan, Permodalan Nasional Bhd, Employees Provident Fund and Khazanah Nasional Bhd.

Innovative Products

2018 would see an aggressive introduction of innovative products to rope in the younger generation as the current sales volume penetration rate is quite low. As Malaysians have become more conscious of their health, additional channels of distributions will be enforced in 2022.

More emphasis is given to digitalisation of life insurance products to target an increase in terms of insurance penetration and premium volume.

Affordable Products

The insurance sector is also looking forward to making life insurance more affordable in 2022. The major reason for this is to reduce the financial strain for average and low income earners so that more people acquire insurance policies for themselves.

Another important reason for this step is because insurance coverage would become a necessity soon rather than just being an option as Malaysia is progressing economically. The objective is to offer cheaper and affordable products so everyone can have full insurance coverage.

Steps Taken to Promote Insurance Sales

All major insurers have taken various steps to reach more people and promote insurance sales. AIA Group is planning to recruit more insurance agents among Bumiputeras to increase insurance penetration among them.

Only 15% of the entire population of Bumiputeras have life insurance in Malaysia. AIA’s idea is to promote awareness about life insurance protection among the community. This also will help with the objective of Bank Negara Malaysia to meet a Takaful penetration of 75% by 2022.

Takaful Life Insurance Outpaces Conventional Life Insurance

2021 saw an increase in Takaful life policies when compared to conventional life policies. This increase is also predicted to continue in 2022. There was a 5.2% increase in Takaful policies in 2021. The family Takaful life plan accounted for 30.5% of the total new business premium in 2021.

The same growth is projected to continue in 2022 as Takaful continues to show a healthy growth momentum and potential to strengthen its position in Malaysia.

New Takaful Products To Boost Growth

The Syarikat Takaful Malaysia Bhd which is the only pure Takaful operator in Malaysia, has invested in new technology, tools and applications to improve the insurance market and enhance customer experience.

As the total net profit for Takaful Malaysia was an increase of 43.4% in 2021, these new products are expected to increase the net profit and growth rate in 2022. Takaful is also looking at online sales through digitalisation to promote insurance awareness and sales.

What to Look Forward in 2022?

  • Innovative life insurance products.
  • Affordable policies for average income household.
  • Policies easy to obtain through online portals.
  • Local insurers strengthening their position in Malaysia.
  • Increase in awareness about life insurance.


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