AAA Conference Members Report in Malaysia
This report provides updated information on MP Insurance Brokers Sdn Bhd, including membership details, professional indemnity details, insurance broker and agent education programs, regulatory information, market conditions in Malaysia, and insights on the insurance industry there.
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AAA Conference | 17 May 2018 Auckland, New Zealand Members Report: MP Insurance Brokers Sdn Bhd
AAA Members Report Malaysia Country : Malaysia Name of Member : MP Insurance Brokers Sdn Bhd Membership details (update) Annual Premium Turnover Number of Staff Location : RM 43 million : 20 : 25-3 & 25-5, The Boulevard Office, Lingkaran Syed Putra, Mid Valley City, 59200 Kuala Lumpur Countries of Operation : Malaysia
AAA Members Report Malaysia Professional Indemnity Details (update) Limit of Indemnity : RM10 million Legislative Requirements : Financial Services Act 2013/Islamic Financial Services Act 2013 Insurers : Pacific Insurance Berhad with Markel
AAA Members Report Malaysia in the country What Insurance Broker and Agent : Basic Certificate Course in Insurance & Takaful Education Programs exists Broking (BCCITB) required for new entrants Continuous Professional Development with minimum 20 hours annually Who regulates Insurance Brokers : Bank Negara Malaysia (Central Bank)
AAA Members Report Malaysia Number of Insurers : 55 operate in the Country New Insurer : Danajamin Nasional Berhad (Financial Guarantee Insurer) How many Insurers Life & GeneralBusiness : 4 (Composite) General Business : 19 Life Business : 10 Reinsurers : 7 Takaful Operators : 11 increasing or stable Market conditions Number of Insurers decreasing, Retakaful Operators : 4 Number of Insurance Brokers : 30 Insurance Broker (G.I) : 1 Insurance Broker (Composite) : 28 Takaful Broker : 1
AAA Members Report Malaysia Market Conditions Insurance capacity decreasing, increasing, stable : Increasing but Lloyds did not secure Tier 1 license Premiums decreasing, increasing, stable : Decreasing and market is very soft Motor Detariffication +/- 10% Fire Detariffication +/- 30% : Stable Commissions decreasing, increasing, stable Average Broker income percentage earned as fees : 15% Non-Motor & Employee Benefits 10% Motor and Employee Benefits
AAA Members Report Malaysia Number of Brokers decreasing, increasing, stable : Stable (30 brokers licenses as per last year) Overall level of Insurance Business decreasing, increasing, stable : Decreasing due to de-tariffication of Motor & Fire Percentage of business controlled direct by Brokers : 14.46% (G.I.) 11.07% (Takaful) Percentage of business controlled direct by insurers : 17.05% (G.I.) 38.00% (Takaful) : 68.49% (G.I.) 50.94% (Takaful) Percentage of business controlled by agencies & other outlets
AAA Members Report Malaysia Information Technology used by Brokers (including Internet) : Equal Insurance Broking System Locally developed broking software
AAA Members Report Malaysia Political issues at time of report : 14th General Election May 9th 2018 Economy at time of report : The Malaysian economy registered a GDP growth of 5.8% (2017) against 4.2% (2016) The country s economy is projected to register 5.0% - 5.5% growth in 2018. Domestic demand continues to be the principal driver of growth. Private investment growth is expected to expand over 7.0% in 2018. Domestic Demand projected to grow at 5.2% in 2018 Contributing Factors : Projects MRT2, ECRL, Pan Borneo Highway, Menara Warison etc.
AAA Members Report Malaysia Member s view of Insurance Broking over the next three years: Overview of Current Market Conditions THE GENERAL INSURANCE ASSOCIATION OF MALAYSIA (PIAM) Gross Written Premium 2017 2016 2015 Growth / Decline from 2016 Motor RM8.32 billion RM8.17 billion RM8.09 billion Growth 1.9% Fire RM3.41 billion RM3.27 billion RM3.10 billion Growth 4.2% Medical & Health RM1.1 billion RM1.03 billion RM0.96 billion Growth 6.6% MAT RM1.34 billion RM1.56 billion RM1.682 billion Decline 7.0% PA RM1.13 billion RM1.30 billion RM1.303 billion Decline 12.6% Misc (Bonds, Liability, Engineering & WC) RM2.355 billion RM2.35 billion RM2.31 billion Growth 0.2% Flat or (0.02%Decline) (relative to 1.1% last year) Overall RM17.65 billion RM17.67 billion RM17.48 billion
AAA Members Report Malaysia Overview of Current Market Conditions (con t) THE LIFE INSURANCE ASSOCIATION OF MALAYSIA (LIAM) SUM ASSURED Type 2015 2016 Difference Growth Traditional 345,955,466,648 341,442,701,192 (4,512,765,456) -1.3% Investment-linked 376,173,903,116 440,278,367,250 64,104,464,134 17.0% Group 515,492,186,004 518,115,555,078 2,623,369,074 0.5% TOTAL 1,237,621,555,768 1,299,836,623,520 62,215,067,752 5.0% NUMBER OF POLICIES Type 2015 2016 Difference Growth Traditional 8,217,633 8,003,614 (214,019) -2.6% Investment-linked 4,215,701 4,533,941 318,240 7.5% Annuity 95,169 96,147 978 1.0% TOTAL 12,528,503 12,633,702 105,199 0.8%
AAA Members Report Malaysia Overview of Current Market Conditions (con t) THE LIFE INSURANCE ASSOCIATION OF MALAYSIA (LIAM) NEW BUSINESS ANNUAL PREMIUM EQUIVALENT Annual Premium Equivalent January to December RM million 2015 2016 GROWTH Individual - Traditional 1,909 2,290 20.0% - Investment-linked 2,640 3,074 16.4% Group 366 348 -4.8% Individual + Group 4,914 5,713 16.2% On new business total premium basis, the industry grew 6.9% in 2016 with total premium volume recording RM9.75 billion Note : Life Insurance & Family Takaful Framework (Effective 23/11/2015) Transformation Process Government s aspiration to have 75% of population insured by 2020
AAA Members Report Malaysia Overview of Current Market Conditions (con t) THE MALAYSIAN TAKAFUL ASSOCIATION (MTA) 2015 2016 GROWTH Moderate growth for Gross Contributions Motor Takaful RM1.42 b RM1.46 b 2.3% Single digit growth for Gross Contributions Non-Motor Takaful RM0.88 b RM0.95 b 8.6% Insurers entering the micro-takaful market and the liberalisation of commission structures in the life insurance sector are the biggest drivers. In 2016, key regulatory measures for takaful were introduced to promote a more rigorous process for capital management. Two policy documents were issued on Internal Capital Adequacy Assessment Process (ICAAP) and Stress Testing for takaful operators. These measures aim to strengthen capital adequacy assessment and risk management whereby takaful operators are expected to establish internal capital level targets and assess their overall capital adequacy and ability to meet future claims.
AAA Members Report Malaysia Phased Liberalisation of Motor and Fire Classes Implementation Dates Motor Class Fire Class 1st July 2017 Premiums +/- 10% Expanded Scope of Coverage To-date 31 New Motor Products launched Premiums +/- 30% Selected Occupation To-date 26 New Fire Products launched
AAA Members Report Malaysia INSURANCE MARKET in Next 3 years De-tariffication (Motor and Fire) The phased liberalisation plans will continue to feature and revenues and margins will erode further. At the moment the motor is not showing too much fluctuation in premiums as the Bank Negara parameters stipulate a +/- 10% margin on motor pricing. However, the Fire classes will likely register a much bigger gap as starting point for most insurers average at a 25% to 30% reduction with package policies. Due to this, we are anticipating a drop in overall G.I. premiums by about 5% to 6% in 2018/19. So, the insurance broking earnings will likely fall in the same proportion. ASEAN Community There is still not much clarity as to the actual impact of this initiative although the 7th Package of Commitments under the ASEAN Framework Agreement on Services included the commitment by Malaysia to liberalise the cross-border supply of marine aviation and transit insurance and insurance broking services since 20 December 2016 Digital Platforms and New Distribution Channels 2017 was reflective of a landmark year for digital transformation particularly for claims processes and back end support functions. Insuretech and aggregators will likely surface in a more definitive format and erode market share from some of the channels.
AAA Members Report Malaysia Any major issues to be resolved : No : Continue to develop and build team expertise in focus areas such as Financial Lines, Employee Benefits Member s principle activities over last year Member s planned activities over the coming year : Continue with our focus in Financial Lines, Employee Benefits and Digital offering.
