THE nation’s general insurance (GI) industry posted a commendable 6.9% year-on-year (YoY) growth in gross written premiums (GWP) in 2024, reaching RM23.1 billion.
The growth was primarily driven by a recovery in vehicle sales and sustained activity in infrastructure-related projects.
However, rising claims and cost pressures eroded profitability, with underwriting profit declining by 11%.
Despite ongoing global economic headwinds — including persistent trade tensions and inflationary pressures — the local insurance sector demonstrated resilience.
According to the General Insurance Association of Malaysia (PIAM), growth was particularly strong in the motor, fire, marine, aviation and transit (MAT) segments, supported by renewed domestic demand and industrial expansion aligned with the national economic framework.
Motor, Fire Lead, Profitability Under Pressure
Motor insurance continued to dominate the GI market, registering a 6.7% increase in premiums, equivalent to RM651.1 million in new business.
This was bolstered by a 2.1% rise in new vehicle registrations in 2024, according to the Malaysian Automotive Association (MAA).
However, profitability in the segment was squeezed by higher repair costs, increased Sales and Service Tax (SST), and a spike in accident claims.
Net claims incurred in the motor segment rose by 18.8% over five years to RM6.5 billion in 2024.
Fire insurance, the second-largest premium contributor, expanded by 5.8% or RM258.5 million.
The increase was attributed to a 4.9% rise in average premiums, reflecting higher material and reconstruction costs.
Despite mounting reinsurance expenses and a rise in weather-related incidents, Fire remained profitable, with a Net Claims Incurred Ratio (NCIR) of 34.1%.
Health Insurance Grows
Medical and Health Insurance (MHI) saw a 10% jump in premiums last year, even as average premium levels dropped by 12.5%.
However, the NCIR in this segment remained elevated at 68.3%, underlining the persistent challenge of medical cost inflation.
“If premium levels are not managed moving forward through industry-wide initiatives, the industry could face future headwinds in sustaining profitability and managing risks within this class,” PIAM said in the statement.
Other standout performers included personal accident insurance (+14.8%) and MAT (+14.2%), while the liabilities segment also grew 8.1% due to expanding public and business liability exposures. Notably, the contractor’s all-risk and engineering (CARE) segment under the miscellaneous class surged 141.6% over five years, reflecting renewed momentum in infrastructure projects nationwide.
Investment Income Cushions Profitability
The industry’s NCIR rose from 53.7% in 2022 to 57.6% in 2024, largely due to deteriorating motor claims, which made up 60.9% of 2024’s net earned premium.
Nevertheless, the industry maintained a healthy combined ratio of 93.4%, suggesting continued operational efficiency.
Investment income proved crucial, contributing 60% of total operating profits, while net commission ratios stayed stable at 10.4%.
Looking ahead, PIAM projects a sustained growth trajectory in 2025, anchored by Malaysia’s solid economic fundamentals.
“GI industry remains on a steady growth path,” the statement said, with strategic focus shifting toward sustainable underwriting, electric vehicle (EV) insurance innovation and building resilience against climate-related risks.
Bank Negara Malaysia (BNM) has forecast continued GDP growth through 2026, supported by consumer spending, investment and export recovery.
However, insurers will need to contend with rising inflation, driven by fuel subsidy reforms and SST expansion, and an expected increase in medical cost inflation from 15% in 2024 to 16.4% in 2025 — significantly above the Asia-Pacific average of 10%. — TMR
- This article first appeared in The Malaysian Reserve weekly print edition
The post Malaysia’s general insurance grew 6.9% in 2024 appeared first on The Malaysian Reserve.
