In 2023, motor insurance claims in Malaysia—including those for private vehicles, motorcycles, and commercial transport—reached an average of RM15.1 million per day. That’s roughly RM629,000 every hour, marking the largest rise in five years for the country’s biggest insurance segment.
According to the General Insurance Association of Malaysia (PIAM), this daily average represents a steep increase from RM13 million in 2022. PIAM’s Chief Executive, Chua Kim Soon, attributed the spike to two key factors: a growing number of vehicles on the road and higher costs for Own Damage (OD) claims—claims made against one’s own policy following an accident.
The average cost of OD claims rose from RM9,385 in 2022 to RM9,873 in the first half of 2024 (1H2024), largely due to increased repair expenses. Chua noted that modern vehicles are equipped with advanced safety features such as sensors and cameras, which are more expensive to repair. This, in turn, has driven up the costs of spare parts and labour.
Consequently, the average motor insurance premium increased by 4.8% in 1H2024 to RM676. The rise was led by the private vehicle segment, which makes up nearly two-thirds (64.8%) of the overall motor insurance market.
Claim and Premium Trends by Vehicle Type
PIAM’s data highlights how claim costs and premiums have evolved across different vehicle categories:
Own Damage Claim Costs:
Private vehicles:
– 2022: RM9,155
– 2023: RM9,539
– 1H2024: RM9,685
Commercial vehicles:
– 2022: RM25,452
– 2023: RM25,727
– 1H2024: RM26,692
Motorcycles:
2022: RM4,344
2023: RM4,470
1H2024: RM4,021
Average Premiums:
Private vehicles:
– 2022: RM741
– 2023: RM810
– 1H2024: RM857
Commercial vehicles:
– 2022: RM1,577
– 2023: RM1,674
– 1H2024: RM1,742
Motorcycles:
– 2022 & 2023: RM156
– 1H2024: RM154
Impact on Loss Ratios and Insurer Profitability
Despite rising premiums, the total loss ratio across all vehicle types remained within manageable limits, at 70.1% in 2022 and 67.8% in 2023. However, private vehicles consistently posted the highest loss ratios—72.7% in 2022 and 70% in 2023. Chua attributed this trend to the increasing number of registered vehicles and, consequently, more traffic accidents.
“The total loss ratio is a key profitability indicator for insurers,” Chua explained. “As motor claims increase, this ratio goes up.”
Motor insurance claims are influenced by both the frequency (how often claims occur) and severity (how costly each claim is). High-value vehicles, especially imported ones, drive up severity due to their higher repair costs.
Chua emphasized the link between rising claims and premium hikes: “If I receive RM100 in premiums and pay out RM70 in claims plus other expenses, anything above that means a loss. So over time, premiums must adjust to cover those costs.”
The Role of Driving Behaviour and Pricing Flexibility
However, Chua noted that not all drivers will face steeper premiums. With Bank Negara Malaysia’s gradual liberalisation of motor tariffs, insurers now have the flexibility to tailor premiums based on individual driving behaviour. Those with clean records may benefit from lower premiums, while high-risk drivers could face higher charges.
He concluded with a message on road safety:
“A vehicle can be replaced—lives cannot. If you’re trying to get from point A to B quickly, make sure you do it safely.”
