How big is the life insurance industry in Malaysia?

What is the size of the new business total premiums of the life insurance industry in Malaysia? The Life Insurance Association of Malaysia (LIAM) registered RM12.8 billion (US3.06 billion) in new business total premiums in 2021, a 12.4% growth over 2020.

The Life Insurance Association of Malaysia (LIAM) said the stronger performance of the life insurance industry reflects the increase in awareness among the consumers on the importance of life insurance protection amidst the COVID-19 pandemic.

According to LIAM President, Loh Guat Lan, the industry recorded a healthier performance, driven by the strong rebound of investment-linked policies which rose 31.2% to reach RM6.6 billion in 2021, despite the challenging business environment due to the pandemic. Group policies recorded a moderate growth of 7.7% in new business total premiums to RM4.1 billion in 2021. However, traditional policies charted a decline of 17.3% during the year.

“The overall new business sum assured increased to RM461.1 billion, registering a modest growth of 5.4% from RM437.2 billion in 2020. The new business sum assured of investment-linked policies recorded a strong increase of 14.4% from RM107.7 billion to RM123.2 billion in 2021 while group policies recorded an increase of 2.8% and traditional policies, a slight dip of 1%,” Loh said.

“In terms of new policies issued in 2021, we recorded a strong growth of 53.5% from 1.2 million policies in 2020 to 1.9 million policies in 2021. This was mainly due to traditional policies which charted a huge increase of 99.7% to reach 1.2 million policies in 2021.

“One of the factors contributing to this exponential growth was the encouraging take-up of Perlindungan Tenang (PT) policies under the Perlindungan Tenang RM50 Voucher programme which was made available to eligible Bantuan Prihatin Rakyat (BPR) recipients from end-September until end-December 2021.

“For the life insurance sector, a total of 784,496 vouchers worth RM39.2 million were redeemed by the BPR recipients as of end-December 2021. The PT products which cater to the lower-income group, provide basic protection and are affordable with premiums as low as a few Ringgit per month. These products have been specially developed to incentivize the youth, young families and B40 household segment to purchase life insurance,” Loh added

Malaysia life insurance industry outlook

Speaking on the outlook of the industry for 2022, Loh is very positive with the developments in the country in the coming months.

“We are indeed very grateful to the Government for their noble initiative in enhancing the social protection of the lower-income group via the RM50 and RM75 Perlindungan Tenang Voucher (PTV) Programme.

“Under the programme, about 8.4 million eligible BPR/BKM recipients from the household, single and senior citizen categories are entitled to purchase a Perlindungan Tenang protection plan from participating licensed insurers and takaful operators in the country. As of end-December 2021, over 1.7 million vouchers worth over RM85.4 million were redeemed by the BPR recipients under the RM50 PTV.

“The encouraging take-up rate of the PTV programme by the BPR/BKM recipients bodes well with the industry’s financial inclusion agenda as the PTV programme is indeed the best opportunity for the BPR and BKM recipients to introduce financial planning in their families. The waiver of stamp duty for the purchase of Perlindungan Tenang products until the year 2025, in the long run will encourage more recipients to continue with their protection plans to ensure that their family and loved ones are protected against key risks in life.

The introduction of PTV programme to the lower-income groups are expected to support the demand for life insurance policies that will help drive the adoption of life insurance in the country.”

Meanwhile, LIAM CEO, Mark O’Dell said the industry foresees the positive trends will continue in 2022.

“The industry will continue to engage proactively with our key stakeholders and embark on our on-going consumer education programmes to generate awareness on the importance of life insurance protection.

“We will continue to educate the consumers on medical and health insurance and how it can save their lives, factors that could lead to changes on premiums, how to maintain the sustainability of their medical policies and their role as responsible consumers.

We hope more Malaysians will benefit from the various relief measures and financial assistance programme implemented by the life insurance industry to ease the financial pressures on the rakyat and at the same time ensure that they are continuously covered with insurance protection,” O’Dell explained.

Relief measures in Malaysia to cope with the impact of the pandemic

Since the COVID-19 pandemic started in early 2020, various relief measures were implemented to help the rakyat cope with the financial, mental and social impact of the pandemic.

These include:

1. the deferment of 3-month premium payment which had benefitted over 1.2 million policyholders with a total deferred value amounting to over RM3.7 billion;
2. the RM10 million COVID-19 Test Fund in support of the Government to conduct more tests on Malaysians. The CTF had benefitted 60,000 policyholders.
3. Individual life insurers’ relief measures to help policyholders to keep their policies in force;
4. Cash relief assistance and hospital benefits to assist policyholders and their family members who were positive COVID-19;
5. Cash benefits for side effects of COVID-19 Vaccine under the National COVID-19 Immunisation Programme; and
6. the Flood Relief measures to aid victims of the floods catastrophe which hit the country on 18 December last year.

“The Government’s successful roll-out of the COVID-19 Vaccination Programme, the subsequent roll-out of booster shots to increase the immunity levels of the population against new COVID-19 variants and the reopening of the economic sectors in the later part of the year have paved the way for the National Recovery Plan and the transition to an endemic phase. All these factors augur well for the industry, and we will continue to remain focused on working with regulatory authorities and stakeholders to develop a progressive industry to better serve the nation’s needs”, O’Dell added.

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