PETALING JAYA: The Life Insurance Association of Malaysia (LIAM) projects the insurance industry will grow by more than 20% this year and also expects a stronger performance by the insurance industry in 2011.
In a statement, LIAM said the projection for 2011 was in view of the numerous initiatives by the Government to propel the country into a high-income nation by the year 2020.
It pointed out that the life insurance industry performed very well in the first half of this year as new business sales grew by 24% on weighted premium basis, adding that the growth was contributed by a very strong performance in single premium sales that went up by 51% and, to a large extent, by regular premium sales that grew 22%, compared with the same period last year.
“Meanwhile the outlook for the second half continues to be promising. In fact, historically, the second half of the year normally contributes on average 55% to 60% of the full-year business,” it added.
It said the percentage of individuals with life insurance coverage, education and retirement savings, medical and health protection etc currently was still at a low of 41% of the population.
“The percentage is even lower if the fact that there are individuals subscribing to more than one policy is taken into account,” it said.
Compared with many other developed countries, this level is inadequate as the remaining population of 59% doesn’t have any form of insurance protection. This is a cause for concern as the Government moves towards making Malaysia a high-income nation,” it said.
LIAM lauded the Government for earmaking the insurance industry as one of the key areas that would contribute to the nation’s economic growth as it provided perks and incentives aimed at promoting financial planning among Malaysians.
It noted that the insurance-related highlights that were tabled during the Economic Transformation Programme (ETP) Open Day on Sept 21 would propagate growth with the insurance penetration rate reaching 4% of gross domestic products (GDP) by 2020 and the number of policies per population hitting the 75% mark as compared with the current 41% level this year.
“With these new initiatives arising from the programme, we believe almost all aspects of life insurance will benefit immensely. The boost to the insurance industry will depend on how fast the ETP initiatives can kick in,” it said.
LIAM president Md Adnan Md Zain said what could spur tremendous growth would be the personal tax relief of RM6,000, which is now given for life insurance, medical, education and annuity.
“Another area would be the private pension scheme which was tabled in the breakout session of the ETP. How soon the initiatives for allowing EPF fund to be channelled out for private pension funds will also be a factor,” he added.