More road accidents mean rising insurance costs for Malaysian motorists, who claim an average of RM15.1mil a day according to United Kingdom-based research house Global Data.
“As per (data from) the Traffic Investigation and Enforcement Department of Malaysia, traffic accident cases increased by 10% to 598,635 cases last year from 545,588 cases in 2022.
“As a result, the average motor insurance claims paid per day increased to RM15.1mil last year from RM13.4mil in 2022, the highest during the last five years, according to the General Insurance Association of Malaysia (PIAM),” Global Data analyst Sneha Verma said in a statement on Monday (May 13).
Owing to the rising number of road accidents, she said insurers will have to reassess their risk exposure and increase premium rates this year.
“Motor insurance is expected to grow by 8.9% this year, supported by an increase in vehicle sales,” she added.
Based on data from the Malaysian Automotive Association (MAA), she said total vehicle sales reached 202,245 units in the first quarter of the year – an increase of 5% from 192,615 units during the same period last year.
Verma said property insurance was the second largest component, with an estimated 26.4% share of the general insurance DWP for this year.
“It is expected to grow by 11.4% this year, supported by increased demand for natural catastrophe insurance policies,” she said.
According to PIAM figures, the recent surge in torrential rain across Malaysia had increased demand for flood coverage by 33% in the first half of last year, an increase from the 31% increase from the corresponding year-ago period.
“Rising premium prices due to higher claims and inflation will also support the growth of property insurance.
“According to the Statistics Department, total losses due to floods increased by 21% in 2023 amounting to RM755.4mil as compared to RM622.2mil in 2022.
“This is expected to increase the premium rates in 2024 and support property insurance to register a compound annual growth rate (CAGR) of 9.8% during 2024-2028,” she said.
She added that personal accident and health (PA&H) insurance forms the third largest component, accounting for an estimated 10.1% share of general insurance DWP for 2024.
“PA&H insurance is expected to grow by 0.3% in 2024, driven by increasing health awareness and medical inflation, leading to higher demand for health insurance policies.
“PA&H insurance is expected to grow at a compound annual growth rate (CAGR) of 3.1% during 2024-28,” she said.
Although the general insurance industry in Malaysia witnessed slower growth of 7.5% last year compared to 10.0% growth in 2022, mainly because of slower economic growth and tight monetary policy, Verma said growth momentum is expected to rebound this year.
She said this was supported by an increase in premium rates across general insurance lines driven by rising claims and high inflation, as well as heightened demand for natural catastrophe insurance policies owing to an increase in the frequency of extreme weather events.
On the whole, she said the Malaysian general insurance industry is set to grow at a CAGR of 7.8% from RM22.6bill in 2024 to RM30.5bil in 2028, in terms of DWP.
Source: https://www.thestar.com.my/news/nation/2024/05/13/increase-in-road-accidents-will-drive-up-insurance-costs-says-research-firm
