KUALA LUMPUR: The Malaysian life insurance industry could surpass RM77.3 billion by 2028, according to a recent analysis by GlobalData.
The firm expects the industry to grow at a compounded annual growth rate (CAGR) of 5.2 per cent over 2024–2028, from RM63.2 billion (US$13.9 billion) in 2024 to RM77.3 billion (US$17.2 billion), in terms of direct written premiums (DWP).
Meanwhile, insights from GlobalData's Insurance Database estimated the industry to expand by 5.9 per cent in 2024.
This is driven by an uptick in consumer spending led by robust economic recovery, favorable regulatory reforms aiming to promote digitalization, and the country's growing demographic trend of an aging population.
Its insurance analyst Manogna Vangari said the Malaysian economy had shown a robust growth of 4.2 per cent in the first quarter this year from the 2.9 per cent growth recorded in the fourth quarter of 2023.
"This growth was primarily attributed to heightened private expenditure and enhanced investment activities.
"As per GlobalData Macroeconomic forecast, the economy is further expected to grow at an annual average rate of 4.4 per cent over 2024-2026, which will support the growth of life insurance," he added.
Endowment insurance, the largest line of business, is expected to account for a 77.3 per cent share in total life insurance DWP in 2024 and should grow at a CAGR of 5.1 per cent over 2024-2028.
According to GlobalData, increased interest rates and improved labor market conditions prompted a shift in consumer demand towards wealth accumulation products, which will support the growth of endowment insurance.
Vangari said a comprehensive policy document on licensing and regulatory framework for digital insurers and takaful operators released by Bank Negara Malaysia in July 2024 aims to foster the digital transformation of the insurance sector.
He added that the framework is part of the Financial Sector Blueprint 2022–2026, which seeks to promote inclusion, competition and efficiency through digitalisation.
"Favourable regulatory reforms will help in increasing the life insurance penetration rate in Malaysia (3.3 per cent), which was lower as compared to other Asian markets such as Taiwan (9.3 per cent), Japan (6.3 per cent) and Thailand (3.5 per cent) in 2023.
"Changing demographics and digitalization will prompt insurers to provide more competitive and tailored insurance policies that will help in improving the penetration rate," he said.