The Malaysian life insurance industry is forecast to grow at a compound annual growth rate (CAGR) of 5.2 per cent from RM57.5 billion (US$13.1 billion) in 2023 to RM70.3 billion (US$15.9 billion) in 2027, in terms of gross written premiums (GWP), said GlobalData.
The industry is estimated to grow by 2.4 per cent this year in 2023, supported by rising awareness of health and financial planning, low-cost term life and endowment insurance products as well as favorable regulatory developments, according to the data and analytics company.
Manogna Vangari, the firm's insurance analyst said that after witnessing strong growth of 9.3 per cent in 2021, the Malaysian life insurance industry's GWP witnessed a slower growth of 1.2 per cent in 2022.
"The reopening of the economy after the pandemic and a lower disposable income led to a change in consumer preference away from non-essential commodities. These impacted the sales of life insurance policies in 2022," he said in a statement.
In terms of key lines of business, endowment insurance is the largest life insurance line in Malaysia and is estimated to account for a 77.2 per cent share in terms of GWP in 2023.
Vangari said the popularity of endowment insurance in the country is driven by investment-linked insurance policies, as they provide better returns as compared to savings products offered by banks and are used as a tool for wealth planning.
As a result, endowment insurance is expected to grow at a CAGR of 5.5 per cent over 2023-2027, he said.
Term life is the second largest life insurance line, with a 4.6 per cent share of GWP in 2023.
Vangari said due to a change in customer spending preferences post-Covid-19 pandemic and high inflation, insurers in Malaysia have been focusing on providing low-cost and affordable plans to their customers.
Low-cost products such as the Perlindungan Tenang protection plans are provided by the government as social security for its citizens.
"These plans were initially launched in 2021, with premium rates starting as low as RM2.87 per month. However, considering their demand, this has been extended to 2023 for recipients of the Malaysian family assistance program 'Bantuan Keluarga Malaysia", he said.
Vangari said the growth of term life insurance will be supported by the low-cost plans offered under the i-Lindung scheme, where Employees Provident Fund (EPF) members can purchase affordable life insurance and critical illness policies from approved Insurance & Takaful Operators (ITOs).
Term life insurance is expected to be the fastest-growing insurance line during 2023-2027, at a CAGR of 6.7 per cent, he said.