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Malaysia Insurance Report Q2 2010
Business Monitor International, March 2010, Pages: 113
Business Monitor International's Malaysia Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Malaysia's insurance industry.
A major change in relation to BMI's last quarterly report is that they have reviewed all data that is publicly available at the beginning of 2010 in order to ensure that their forecasts for 2009 and this year are reasonable. They have been able to include actual data for 2008 across all countries that they survey in the Asia-Pacific region.
This quarter, BMI include a regional review that looks at the actual and forecast growth rates for premiums – across both major segments. A key insight is that growth in China’s life segment has slowed markedly over the last year or so. Nevertheless, the impact of the global financial crisis was much greater in South Korea, Australia, Singapore and Hong Kong. For the time being, BMI continue to expect that the most rapid growth will take place in countries such as Vietnam and the Philippines – where organised savings are at an embryonic state of development. For non-life insurers, the key insight is that price competition has caused penetration (ie premiums as a percentage of GDP) to fall in many countries: indeed, there has been a fall in absolute premiums in some instances.
As was the case in Q109, BMI provide a ranking of the major players in each of the two main segments – as they are seen by the organisation providing the data (which, in practice, is usually the regulator or the trade association). In Malaysia, for instance, the three largest non-life companies in the first half of 2008 – in terms of gross written premiums written – were Kurnia, Mitsui and Etiqa, with respective market shares of 12%, 7% and 7%. Great Eastern continues to dominate the life segment, with a market share of 24%. Prudential and ING each had market shares of around 14%. Over time, BMI hope to derive insights from observing how market shares change. BMI emphasise though, that a decline in share of gross written premiums is not automatically a bad thing and is often the result of a deliberate corporate decision to focus on more profitable business lines.
In this report, BMI provide a breakdown of the insurance sector by line – from the point of view of the regulator or the trade association. In Malaysia, for instance, the largest non-life lines in calendar 2008 were Land Vehicles Voluntary Insurance (CASCO), Medical Exp & Personal Accident, and Marine, Aviation and Transport. These accounted for 39%, 13% and 11% respectively, of total non-life premiums. Over time ,BMI should be able to use this information to bring greater sophistication to their forecasting process.
BMI are looking for total premiums in 2009 of MYR35,060mn. This includes non-life premiums of MYR10,993mn and life premiums of MYR24,067mn. In 2014, the corresponding figures should be MYR76,171mn, MYR22,199mn and MYR53,973mn. In terms of the key drivers that underpin their forecasts, BMI are looking for non-life penetration to change from 1.58% in 2009 to 2.11% in 2014, and for life density to rise from US$253 to US$524. BMI’s proprietary Insurance Business Environment Rating for Malaysia is 63.5 out of 100.
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