Insurance industry hopes for human capability enhancement incentives in Budget 2015

0

KUALA LUMPUR: The insurance industry, comprising takaful and general insurance companies, wants more tax incentives and relief from the government in the upcoming Budget 2015, for investment in human capability enhancement.

The Malaysian Insurance Institute (MII) chief executive officer Datuk Syed Moheeb Syed Kamarulzaman said alongside the relief in terms of books, computers and other paraphernalia, it is hoped that there could also be some incentive for employers as well to invest in staff training.

He said this is in line with Malaysia’s aim to be a high income nation, and this could only happen faster if companies invested in human capability enhancement.

“Where insurance is concerned, there is a requirement by the authorities that insurance companies should contribute a percentage of their payroll for training.

“But this can be further enhanced by awarding incentives that would prompt companies to spend more on training, rather than the minimum requirement,” he told Bernama.

He said currently, the incentives were sectoral and not across the board.

Syed Moheeb also said the value of consumer insurance premiums can be controlled by ensuring that items that may impact property, assets and car prices, are tax exempted.

He said for the first half of 2014, the breakdown of insurance classes of motor and fire for general insurance was at 62.5 per cent.

This, he added, is almost two thirds of the premiums in the insurance classes.

“On the fire insurance, it does not only consist of the building, but also machinery and the finished goods.

It is not a simple thing of looking at one item and being exempted from the input tax and this we really need to analyse.

“In summary, items that goes into the tax exempt category for the calculation of input tax, would be better for the consumer,” Syed Moheeb added.

He said the MII was also requesting for more incentives for savings, either under the Employee Provident Fund (EPF) or insurance-based savings, focusing on annuities.

Under the Budget 2014, the government proposed a one-off incentive of RM500 to contributors who participated in the PRS with a minimum cumulative investment of RM1,000 within a year.

“Savings is another way of moderating inflationary growth, so when there are more people saving, the better it is. But the relief is limited,” Syed Moheeb said.

He said the private retirement scheme (PRS) has generated growth but needs to be reinforced.

“Incentives regarding the PRS will be an added advantage.

“But what is clear is that worker’s savings in the EPF will not be sustained for long.

“With the PRS, it will ease their burden,” he added.

He said according to EPF’s estimation, 58 per cent of retirees finish their savings within five years, while Malaysia’s life expectancy is 73 years and this would lead to social issues.

Meanwhile, the General Insurance Association of Malaysia (PIAM) is advocating a further increase in the tax relief on contributions to the EPF to commensurate with the current salary ranges for the private sector.

Relief on insurance premiums paid, particularly for general insurance for personal protection, such as education and medical and health policies would be welcomed and should be encouraged further, it said in a recent statement.

“This does not only lessen the government’s burden on education services and medical costs, but also provides the people with peace of mind,” it added.

PIAM is also hoping for a separate tax relief to be allowed for small and medium-sized businesses to encourage them to take up more liability insurance, which in the long run will help them better manage their risk exposure. — Bernama