Bank Negara Malaysia, the country’s central bank, is targeting a 75% national policy-to-population ratio by 2020, up from the current level of 56%.
BNM governor Tan Sri Muhammad Ibrahim, who spoke at the Malaysian Insurance Summit 2017, said it could even be possible to exceed 100%.
The ratio of life insurance policies and family takaful contracts to the total population in Malaysia increased to 56% in 2016 from 25.3% in 1996, according to a report by the New Straits Times. In addition, the country’s insurance and takaful sector grew at an annual rate of 10.47% in the two decades prior to 2016. The sector also makes up 6% of the Malaysian financial system’s assets.
Muhammad expressed concern that despite liberalisation efforts, insurance and takaful remain unattractive to large segments of the population which remain unprotected.
“From the perspective of the population that remain underserved, the existing business models are essentially broken,” he said.
In order to address the insurance and takaful industry’s issues, BNM will launch next month Perlindungan Tenang, a national branding and communication platform. It is intended to reach 8 million working-age Malaysians and over 700,000 micro businesses that need the protection provided by insurance or takaful.
“The insurance and takaful sector needs to catch up,” he said, urging the industry to adopt digitalisation.
“[It is] a very poor achievement. With consumers already enjoying benefits of digitalisation in many other daily activities, consumers should expect better level of personalisation, responsiveness and reliability from their insurance and takaful experience.”
Currently, online distribution accounts for less than 0.1% of the volume of insurance/takaful policies sold.
Related stories:
Malaysian central bank to issue trade credit insurance framework
Malaysian government warns against protection scam
Malaysian motorists can now renew motor insurance via app
