Insurance industry positive despite challenges BY DALJIT DHESI

by **Cals** Mon 30 Dec 2013, 00:15

Published: Saturday December 28, 2013 MYT 12:00:00 AM
Updated: Saturday December 28, 2013 MYT 8:03:19 AM
Insurance industry positive despite challenges
BY DALJIT DHESI
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Seah is upbeat on the industry’s outlook for next year.
INSURANCE industry players and observers are optimistic that the industry will still enjoy positive growth in 2014 despite persistent challenges.
They say initiatives such as the Financial Sector Blueprint ( 2011-2020), Economic Transformation Programme (ETP), 10th Malaysia Plan and a low penetration rate of insurance will drive growth.
Prudential Assurance Malaysia Bhd (PAMB) chief executive officer (CEO) Philip Seah is upbeat on the industry’s outlook next year, predicting that the segment will achieve a 2% to 5% growth this year.
“The growth of the industry for 2014 will be further propeled by the fact that the insurance industry has been earmarked by the Government to be one of the key areas that will contribute to the nation’s economic growth.
“The insurance-related highlights that were tabled during the ETP announcement is expected to propagate growth with the insurance penetration rate reaching 4% of gross domestic product by 2020 from 2.8% currently and the number of policies per population hitting the 75% mark as compared to the current 41% level,” Seah tellsStarBizWeek, adding that the takaful segment will be a key focus as the segment remains underserved.
Allianz Malaysia Bhd CEO Jens Reisch says the company will continue to expand and diversify agency, bancassurance and alternative distribution channels as well as use the social media channel to promote the services of the general insurance arm.
Allianz’s life insurance arm will focus on diversifying and strengthening agency market segmentation.
Meanwhile, Deloitte Consulting Southeast Asia financial services strategy leaderMohit Mehrotra expects 8% to 12% growth rates for the industry driven by multinational companies and a tapering of growth in family takaful space, which had grown rapidly in the last couple of years.
He says there could be merger and acquisition (M&A) opportunities in the non-life segment next year.
“Consolidation, largely driven by the acquisition by foreign multi-nationals of Malaysian interests – remains a key theme in the segment. This is coupled by the growing interest in Islamic financial services and will drive more takaful related plays in the M&A space, Mohit explains.
General Insurance Association of Malaysia anticipates at least 7% to 8% growth for the segment, which will more or less mirror gross premium rates growth from 2010 to 2012. As of the third quarter ended Sept 30, the segment posted an operating profit of RM1.44bil attributed to a higher premium income and lower claims ratio.
Gross direct premiums grew 6.8% to RM11bil, mainly from motor and aviation businesses, with the motor business contributing 46.1% of total gross direct premiums.
Besides the focus on growth numbers, insurance companies will also be active in recruiting talent with Syarikat Takaful Malaysia Bhd group managing director DatukMohamed Hassan Kamil pointing out that the rapid development of the industry has left a critical shortage.