General takaful contributions are expected to expand at 6-7% this year with the progressive impact of tariff liberalisation and moderate economic growth, according to rating agency RAM Rating Services.
The 2019 growth rate would be slower when compared to last year when general takaful contributions increased by 8% to MYR2.8bn ($687m). “All major business lines charted growth with motor taking the lead, followed by medical and personal accident coverage, and fire plans,” said the agency.
“However, the lack of significant catalysts for motor sales and property transactions might limit growth going forward,” it said.
Family takaful
In family takaful, new business growth is expected to be 7-9% this year, given weaker consumer sentiment and rising cost of living, the agency said.
It added that the family takaful segment was spurred by the growth of ordinary family products where new business contributions grew at 13.1% to MYR4.9bn in 2018, but its profitability was affected by soft investment conditions.
“The family takaful penetration rate is currently low at about 15% and an anticipated moderation in private consumption growth may tamper with near-term demand.
“The recently announced ‘mySalam’ national health protection scheme which provides takaful coverage to the B40 lower-income group may act as a catalyst for future purchases of individual protection plans,” it said.
Outlook
Overall, the agency is maintaining a stable outlook on Malaysia’s takaful industry for 2019, on the back of resilient growth amid an evolving operating landscape.
“Despite near-term moderation, the long-term growth prospects for the industry remain anchored by Malaysia’s supportive demographics, low penetration rates and awareness initiatives targeted at the Muslim-majority mass market,” the agency said.
Takaful represents 17% of the total premiums of the combined conventional and takaful sectors.
Upcoming regulatory changes include enhancements to the existing Takaful Operational Framework, while revisions to investment-linked product guidelines would be effective in 2020 for family takaful operators, the agency said. M
MYR1 = $0.25