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Latest News
Slower Growth In Insurance Sector Seen
 
News From : DagangHalal.com (12/20/2010)

But life insurance expected to expand by at least 12% in 2011

PETALING JAYA: The insurance sector is expected to continue its growth momentum, albeit at a slower pace, with the life insurance business projected to grow by at least 12% next year.

Life Insurance Association of Malaysia (LIAM) president Md Adnan Md Zain said: With the economic growth projected to be around 5% next year coupled with the recent Economic Transformation Programme initiatives such as the Employee Insurance Scheme, Private Pension Scheme and the Foreign Workers Health Insurance Scheme, we should see the industry topping at a pace of at least 12% in new business sales next year.

New business sales rose by 19% on a weighted premium basis in the first three quarters of 2010 attributed by a strong performance in regular premium sales which went up by 21% compared with the same period last year. Single premium business, however, registered a small decline of 1%.

With the low interest rate environment and higher disposable income, he said there was fresh impetus for consumers to seek high yielding products like insurance.

There was also a lot of potential in the life insurance market as the current penetration rate of 41% was lower than the more developed Asian economies, Md Adnan told StarBiz.

With rising medical costs and a slight uncertainty in the market, he said products such as health/medical, protection and savings related products would be the dominant types that would take the lead in seeking better penetration and growth.

Expressing a more optimistic outlook, Great Eastern Life Assurance (M) Bhd its director and CEO Koh Yaw Hui said the insurance market was projected to grow very strongly in the region of 15-20% next year. He added that the growth was underpinned by the strong growth momentum expected from the takaful business, especially with the issuance of four new family takaful licences this year.

General Insurance Association of Malaysia (PIAM) executive director Lim Chia Fook said the association expected the outlook for the general insurance sector next year to be positive with an increased demand for general insurance in all sectors. The medical and health insurance (MHI) sector was expected to remain strong in terms of growth which would be driven by growing consumer awareness and an increasing need for protection against escalating costs of medical and health care services, he noted.

Lim said the recently announced medical insurance plan for foreign workers to be implemented early next year would add further impetus to the MHI sector.

Apart from further pick-up in demand for property and liability insurance, the automotive sector would provide the stimulus for growth in the motor insurance sector, he said.

He said PIAM expected new areas of growth in micro-insurance products, especially in view of the fast developing small and medium enterprises sector as well as the biotechnology sector.

ING Insurance Bhd president and CEO Datuk Dr Nirmala Menon said that besides medical, protection and savings-related products having the biggest potential for growth, the industry would also be seen formulating a more comprehensive financial solutions plan for women to help them plan ahead better.

She also reckons that education plans would be popular as parents opt to give the best education to their children and that financial planning would be crucial to ensure there are sufficient savings for their children's future education.

Special focus would also be given to takaful products to capture the under-penetrated Muslim population which currently stood at below 10%, she noted.

Prudential Assurance Malaysia Bhd (PAMB) CEO Charlie E. Oropeza said the company's nine-month performance to September 30 had been really strong with total new business sales (conventional life insurance and takaful ) increasing to RM655mil, up 40% from the same period in 2009.

He said investment-linked products have been the mainstay of PAMB's business and would continue to be the driving force behind the company's long term growth, adding that it also expected to see a strong demand for medical/health riders.

Great Eastern's Koh said the challenge for the industry was to design suitable and affordable products that suit people's needs and boost the penetration rate of insurance in the country, noting that Taiwan has an insured rate of about 200% compared with 41% in Malaysia.

ING's Nirmala said that besides educating consumers on the importance of financial planning, the training of agency force would need to be intensified further as the professionalism of financial planners would affect consumers' ability to trust their advisers when it came to financial purchases.

Oropeza said besides enhancing the quality and professionalism of agents, another major challenge would be in attracting and retaining talent in the industry as finding the right people was a common probleml faced by all financial institutions.

- The Star Online

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