KUCHING: The life insurance industry registered a lacklustre new business growth of 2.2 per cent last year based on RM4.3 billion weighted premiums, according to the Life Insurance Association of Malaysia (Liam).
According to OSK Research Sdn Bhd (OSK Research) in its research report, “The lacklustre new business growth in 2012 was below our expectations of a five per cent growth versus 5.8 per cent growth in 2011 and 15.3 per cent in 2010.”
On the other hand, the investment-linked (IL) products continued to be the dominant force of new business growth, contributing approximately 49.5 per cent of new business. In 2011, IL products contributed just 45.6 per cent.
“The IL product segment saw aggressive growth against the traditional policies from 2010 when it contributed 44.4 per cent of new business mix versus 37.5 per cent in 2009,” it added.
The research house observed that insurance coverage and penetration rates remained low in Malaysia. The average sum premised on a total population of 29.3 million people as of 2012 worked out to be RM34,700 per capita and only 112 per cent of gross national income per capita.
According to Liam, the ideal average sum insured per person should be at 10 times of annual salary which should translate to average sum insured of RM310,000 per capita. In 2012, Liam also reported at 19-per cent growth based on total claims paid at RM6.7 billion in 2012 versus RM5.6 billion in 2011.
“Liam also reported an additional RM7.6 billion paid for policies that approached maturity and/or surrendered.
“This is within expectations and we think that the growth in claims paid will likely exceed the overall industry growth in life premiums.”
OSK Research believed that this might impact claims ratios, mainly due to movements in portfolio maturity among the older players.
However, the research house opined that claims ratios could still be sustained, buoyed by the new business growth momentum.
Overall, OSK Research believed that the life insurance industry still had room and opportunities to grow in the country.