Malaysia’s life insurance market is set to exceed MYR77.3 billion (US$17.2 billion) in direct written premiums (DWP) by 2028, growing at a compound annual growth rate (CAGR) of 5.2% from 2024 to 2028, according to data from analytics firm GlobalData.
GlobalData’s Insurance Database projects the life insurance sector will expand by 5.9% in 2024, driven by stronger consumer spending linked to economic recovery and favourable regulatory changes focused on digitalisation.
The country’s aging population is also expected to play a role in this growth.
Manogna Vangari, insurance analyst at GlobalData, pointed out that the Malaysian economy grew 4.2% in the first quarter of 2024, up from 2.9% in the previous quarter, primarily due to higher private spending and increased investments.
The firm expects Malaysia’s economy to maintain an average annual growth rate of 4.4% over the 2024-2026 period, providing further support to the life insurance sector.
Endowment insurance, which is expected to make up 77.3% of life insurance premiums in 2024, remains the largest product line. Linked insurance products saw a 7.8% increase in premiums in 2023, while non-linked products grew by 4.4%.
Vangari said that rising interest rates and improved labour market conditions are driving demand for wealth accumulation products, which will support the growth of endowment insurance at an expected CAGR of 5.1% through 2028.
She also pointed to regulatory reforms as a key factor for future growth. In July 2024, the Central Bank of Malaysia issued new guidelines aimed at fostering the digital transformation of insurers and takaful operators. These reforms are part of the Financial Sector Blueprint 2022-2026, which seeks to enhance inclusion, competition, and operational efficiency through increased digitalisation.
Whole life insurance, the second-largest segment, is projected to account for 7.5% of premiums in 2024, with a growth rate of 2.3% for the year. This increase is driven in part by Malaysia’s aging population, which is expected to see the share of people aged 65 and above rise from 8.1% in 2023 to 8.7% by 2025, according to GlobalData forecasts.
Term life insurance, the third-largest segment, is forecast to represent 4.4% of DWP in 2024. Premiums for term life products increased by 5% in 2023, reflecting changing consumer spending patterns due to inflation.
To address affordability concerns, Malaysia’s government introduced the i-Lindung platform in 2022, offering low-cost life and critical illness insurance to Employees Provident Fund (EPF) members. An expansion of the platform, i-Lindung Phase 2, was launched in February 2024 to extend coverage beyond one year.
Additionally, the Life Insurance Association of Malaysia launched the i-MULA 50 Starter Pack Insurance Fund in August 2024. This initiative is designed to offer more accessible insurance options to 100,000 eligible Malaysians. Term life insurance is expected to grow at a CAGR of 4.9% from 2024 to 2028.
Despite the expected growth, Malaysia’s life insurance penetration rate stood at 3.3% in 2023, lagging behind other Asian markets such as Taiwan (9.3%), Japan (6.3%), and Thailand (3.5%).
Vangari suggested that ongoing digitalisation efforts and changing demographics would push insurers to offer more competitive, customised products, potentially improving the penetration rate in the future.
In addition, Malaysia’s motor insurance market is projected to grow at a 7.5% CAGR, reaching MYR14.2 billion ($3.1 billion) in premiums by 2028.
Motor insurance is expected to make up over 45% of the general insurance sector by 2024, with growth driven by higher vehicle sales and rising premium rates.
