According to the report by GlobalData, Malaysia life insurance direct written premiums should reach $17.2 billion by 2028 and be supported by a CAGR of 5.2% between 2024 and 2028. It is reported that such growth will be led due to a strong recovery of consumer spending, improvement in regulatory mechanisms, and the growth in the percentage of the aging population.
GlobalData similarly foresees the life insurance sector in Malaysia to grow by 5.9% in 2024, based on robust economic performance and reforms from regulation. The Malaysian economy grew by 4.2% in the first quarter of 2024, paced much faster than the 2.9% seen during the preceding quarter, partly due to private consumption and investments in the country. According to Manogna Vangari, Insurance Analyst at GlobalData, the economy growth will continue at a moderate rate of 4.4% in the near term, thereby also fostering the momentum needed for life insurance market growth.
Market Segment: Endowment-77.3% of direct written life insurance premiums in 2024 Biggest Segment (currently): Although the largest part, it dipped 1.2% in linked insurance and 1.6% in non-linked in 2023. Increasing Demand: It is likely to increase at a compound annual growth rate of 5.1% from 2024 to 2028 while increasing 7.8% in linked insurance and 4.4% in non-linked in 2023.
Besides economic growth, regulatory reforms will add impetus to market expansion. In July 2024, Bank Negara Malaysia introduced its newly established Policy Document on Digital Insurers and Takaful Operators to enhance further digitalization and inclusion in the insurance sector. This is part of the larger Financial Sector Blueprint 2022-2026, through which the banking sector will gain increased competition and efficiency.
We expect whole life insurance to be one of the business lines to benefit from Malaysia’s ageing population, a circumstance that we anticipate will contribute 7.5% of DWP in 2024. The percentage of Malaysians aged 65 or older is expected to grow from 8.1% in 2023 to 8.7% in 2025. We expect whole life premiums to enjoy a compound annual growth rate of 1.9% through 2028.
Another product, term life insurance, stands at 4.4% of DWP in 2024 and slowly grows, which may further expand to 4.9% CAGR over the following five years, fueled by affordable options such as that supplied under the government-backed insurance program i-Lindung, whose coverage should be maximized.
All this translates into life insurance penetration in Malaysia, at 3.3% in 2023, to rise as the insurers respond to demographic change and digitalization with a focus on making markets both more competitive and accessible.
