Evolving landscape a structural positive for Malaysian insurers

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KUALA LUMPUR: Malaysia’s insurance industry continues its positive development on the regulatory front, in tandem with steady business expansion, says Fitch Ratings.

The rating agency said low insurance penetration, stable domestic consumption and sustained government infrastructure spending will continue to support premium growth, particularly in commercial lines.

The second phase of motor tariff deregulation is likely to spur further rationalisation, Fitch said in its report on Malaysia Insurance Market Dashboard 2017, released yesterday.

Nevertheless, Fitch expects the overall market to remain relatively stable, supported by consumer safeguards put in place by the regulators and the profitability from the fire class.

It said further consumer-focused measures from the Life Insurance and Family Takaful (LIFE) framework are likely to be implemented this year and should boost professionalism and transparency, while providing the flexibility to innovate and tailor cost structures to respective business and competitive strategies.

Fitch said it continues to expect insurers’ strong capital buffer to withstand underwriting shocks or market volatility.

Smaller-scale composite players may seek external capital or engage in mergers and acquisitions activities as the deadline for splitting their life and non-life operations draws near.

Fitch also views the entry of Lloyd’s of London to the onshore market, and the increasing market and regulatory-driven pressures to digitise operations, as favourable progress in the long term. — Bernama