Insurance in Malaysia - History, Regulator, Insurance Companies, Takaful Operators

In Malaysia, the insurance industry plays a crucial role in safeguarding the well-being of its citizens. From traditional life insurance to innovative products and services, Malaysia’s insurance landscape is dynamic and responsive to the evolving needs of its diverse population. In this article we will delve into the intricacies of insurance in Malaysia, exploring its history, regulatory framework, companies, takaful operators and the types of insurance products.

Contents:

Insurance Companies in Malaysia

Below is the list of insurance companies in Malaysia, including Takaful Operators, as updated on 22 December (F.Y. 2023/24).

AIA Berhad (Life Insurance)
AIA General Berhad (General Insurance)
AIA PUBLIC Takaful Berhad (Family Takaful)
AIG Malaysia Insurance Berhad (General Insurance)
Allianz General Insurance Company (Malaysia) Berhad (General Insurance)
Allianz Life Insurance Malaysia Berhad (Life Insurance)
AmMetLife Insurance Berhad (Life Insurance)
AmMetLife Takaful Berhad (Family Takaful)
Asia Capital Reinsurance Malaysia Sdn. Bhd. (General Reinsurance)
Berjaya Sompo Insurance Berhad (General Insurance)
Chubb Insurance Malaysia Berhad (General Insurance)
Etiqa Family Takaful Berhad (Family Takaful)
Etiqa General Insurance Berhad (General Insurance)
Etiqa General Takaful Berhad (General Takaful)
Etiqa Life Insurance Berhad (Life Insurance)
FWD Insurance Berhad (formerly known as Gibraltar BSN Life Bhd) (Life Insurance)
FWD Takaful Berhad (Family Takaful)
Generali Insurance Malaysia Berhad (formerly known as AXA Affin General Insurance Berhad) (General Insurance)
Generali Life Insurance Malaysia Berhad (formerly known as AXA Affin Life Insurance Berhad) (Life Insurance)
Great Eastern General Insurance (Malaysia) Berhad (General Insurance)
Great Eastern Life Assurance (Malaysia) Berhad (Life Insurance)
Great Eastern Takaful Berhad (Family Takaful)
Hannover Rueck SE (Life Reinsurance, General Reinsurance)
Hong Leong Assurance Berhad (Life Insurance)
Hong Leong MSIG Takaful Berhad (Family Takaful)
Liberty General Insurance Berhad (formerly known as AmGeneral Insurance Berhad) (General Insurance)
Lonpac Insurance Berhad (General Insurance)
Malaysian Life Reinsurance Group Berhad (Life Reinsurance)
Malaysian Reinsurance Berhad (General Reinsurance, Retakaful Operator)
Manulife Insurance Berhad (Life Insurance)
MCIS Insurance Berhad (Life Insurance)
MSIG Insurance (Malaysia) Bhd (General Insurance)
Münchener Rückversicherungs-Gesellschaft / Munich Re Retakaful (Retakaful Operator)
Pacific & Orient Insurance Co. Berhad (General Insurance)
Pacific Insurance Berhad (General Insurance)
Progressive Insurance Berhad (General Insurance)
Prudential Assurance Malaysia Berhad (Life Insurance)
Prudential BSN Takaful Berhad (Family Takaful)
QBE Insurance (Malaysia) Berhad (General Insurance)
RHB Insurance Berhad (General Insurance)
Sun Life Malaysia Assurance Berhad (Life Insurance)
Sun Life Malaysia Takaful Berhad (Family Takaful)
Swiss Re Asia Pte. Ltd. / Swiss Re Retakaful (Retakaful Operator, General Reinsurance)
Syarikat Takaful Malaysia Am Berhad (General Takaful)
Syarikat Takaful Malaysia Keluarga Berhad (Family Takaful)
Takaful Ikhlas Family Berhad (Family Takaful)
Takaful Ikhlas General Berhad (General Takaful)
Toa Reinsurance Company Ltd. (General Reinsurance)
Tokio Marine Insurance (Malaysia) Berhad (General Insurance)
Tokio Marine Life Insurance Malaysia Bhd (Life Insurance)
Tune Insurance Malaysia Berhad (General Insurance)
Zurich General Insurance Malaysia Berhad (General Insurance)
Zurich General Takaful Malaysia Berhad (General Takaful)
Zurich Life Insurance Malaysia Berhad (Life Insurance)
Zurich Takaful Malaysia Berhad (Family Takaful )

History of Insurance in Malaysia

Colonial Foundations (19th Century)

The roots of insurance in Malaysia extend back to the 19th century during the colonial era. The pioneer in this landscape was the Oriental Life Assurance Company, established in 1819. This marked the initiation of a structured insurance sector, laying the foundation for the industry’s future in the region.

Post-Independence Era (20th Century)

Following Malaysia’s independence, the local insurance landscape experienced growth, with notable contributions from emerging players like The Pacific Insurance Berhad. These developments contributed significantly to the evolution of a more comprehensive insurance market to meet the evolving needs of the nation.

Regulatory Milestone (1963 and 1969)

A pivotal moment in Malaysian insurance history occurred in 1963 with the introduction of the first Insurance Act. This legislation provided a regulatory framework outlining the operations and responsibilities of insurance companies, emphasizing fair business practices, policyholder protection, and overall sector stability.

However, it’s crucial to note that this initial Insurance Act was later repealed and replaced by a more refined regulatory framework in 1969. The revised legislation reflected advancements in the industry, aligning with the changing dynamics of the Malaysian economy and ensuring continued consumer protection.

Birth of Takaful Malaysia (1984)

In response to the growing demand for Islamic financial products, the Government of Malaysia set up a task force in 1984 to study the feasibility of establishing an Islamic insurance company. This initiative led to the establishment of Takaful Malaysia on 29 November 1984. Concurrently, the Takaful Act was enacted in the same year, providing a legislative framework for Islamic insurance operations in the country.

Growth and Diversification (1980s-1990s)

The 1980s and 1990s witnessed a period of significant expansion and diversification within the Malaysian insurance industry. The introduction of foreign insurers brought about new products and innovations, broadening the range of coverage options available to Malaysians. This era also saw the emergence of Takaful, providing Sharia-compliant alternatives to conventional insurance.

The Digital Revolution (21st Century)

The 21st century ushered in a digital revolution, transforming how insurance products were marketed, sold, and serviced. Insurtech initiatives gained prominence, enhancing efficiency and accessibility for consumers. Regulatory bodies, particularly Bank Negara Malaysia (BNM), responded to these changes with guidelines that balanced innovation with regulatory oversight.

Regulation

Malaysia’s insurance industry operates within a comprehensive regulatory framework designed to ensure stability, fairness, and the protection of policyholders. The regulatory landscape is overseen primarily by one entity: Bank Negara Malaysia (BNM), which is the central bank of Malaysia.

Regulators

Bank Negara Malaysia (BNM)

As, mentioned earlier, BNM is the main insurance regulatory authority whose roles and functions include, but not limited to:

1. Role and Responsibilities:

BNM, the central bank of Malaysia, plays a pivotal role in regulating and supervising the financial sector, including insurance.
It formulates and enforces policies to maintain financial stability and safeguard the interests of consumers.

2. Licensing and Approval:

BNM is responsible for issuing licenses to insurance companies, intermediaries, and other relevant entities.
The approval process involves a thorough assessment of the financial strength, business plans, and compliance with regulatory requirements.

3. Prudential Regulations:

BNM sets prudential regulations to ensure the financial soundness of insurance companies.
These regulations cover areas such as capital adequacy, risk management, and investment guidelines to protect policyholders’ funds.

4. Market Conduct and Consumer Protection:

BNM oversees the market conduct of insurance companies, ensuring fair practices and ethical standards.
It establishes guidelines for consumer protection, including transparency in policy terms, disclosure of information, and fair treatment of policyholders.

5. Supervision and Monitoring:

BNM conducts regular supervision and monitoring of insurance companies to assess their compliance with regulations.
The supervisory process includes on-site inspections, off-site surveillance, and the review of financial reports.

Regulatory Framework

Some of the major elements that guide the regulation of Insurance and Takaful in Malaysia includes:

Financial Services Act 2013:

The Financial Services Act 2013 is a key legislative framework that governs the insurance business in Malaysia. It complements the regulatory framework by addressing broader financial services issues, including those related to insurance.
It outlines the powers and responsibilities of BNM in regulating insurance companies and protecting policyholders.
It emphasizes consumer protection and market integrity, contributing to a stable and transparent financial ecosystem.
It repealed previous Insurance Act 1996.

Islamic Financial Services Act 2013:

The IFSA is a key legislative framework that governs the Takaful insurance in Malaysia.
It outlines the powers and responsibilities of BNM in regulating takaful companies and its participants.
It repealed previous Takaful Act 1984.

Ombudsman for Financial Services:

The Ombudsman for Financial Services provides an avenue for policyholders to resolve disputes with insurance companies.
It offers an alternative dispute resolution mechanism, ensuring fair and timely resolutions.

The Malaysian Insurance Institute (MII)

The Malaysian Insurance Institute (MII) stands as a cornerstone in fostering excellence and professionalism within Malaysia’s dynamic insurance industry. Established to elevate the standards of education and expertise, MII plays a pivotal role in shaping the skills and knowledge of individuals operating within the insurance sector. As a non-regulatory institution, MII focuses on providing comprehensive education, training, and professional development programs tailored to meet the evolving needs of the insurance workforce.

MII’s commitment to advancing the industry is evident through its certification and qualification programs, which cover a spectrum of roles, including agents, brokers, underwriters, and other insurance professionals. These initiatives ensure that practitioners not only meet but exceed the stringent standards of competence and ethical conduct demanded by the insurance landscape. As a catalyst for industry collaboration, MII facilitates forums and discussions, creating a platform for the exchange of ideas and the development of best practices. In essence, the Malaysian Insurance Institute stands as a beacon of knowledge, fostering a community of well-equipped insurance professionals who contribute to the growth, innovation, and integrity of the Malaysian insurance sector.

Some of the major functions of MII included:

1. Professional Development:

MII plays a crucial role in enhancing the professionalism and competency of individuals within the insurance industry.
It provides education, training, and professional development programs to insurance professionals, ensuring a high standard of expertise.

2. Certification and Qualifications:

MII offers certification and qualifications for insurance professionals, including agents, brokers, and underwriters.
These certifications ensure that individuals in the industry meet the required standards of knowledge and ethics.

3. Industry Collaboration:

MII collaborates with industry stakeholders, including insurance companies, to promote best practices and standards.
It facilitates forums and discussions to address emerging issues and promote continuous improvement within the industry.

For more details, visit their website: insurance.com.my

Types of Insurance Offered in Malaysia

Life Insurance

Life insurance is a cornerstone of financial planning in Malaysia. It provides a financial safety net for beneficiaries in the event of the policyholder’s demise. Policies may vary, offering benefits such as lump-sum payouts, income protection, and investment-linked plans. Life insurance is not only about preparing for the unexpected but also serves as a long-term investment tool.

Health Insurance

With the rising costs of healthcare, health insurance has become increasingly crucial. Malaysians have access to a range of health insurance options, covering hospitalization, outpatient treatments, and preventive care. Health insurance policies alleviate the financial burden associated with medical expenses, ensuring that individuals can prioritize their well-being without worrying about the cost.

Other General Insurance

Apart from health insurance, other general insurance encompasses a spectrum of coverage, including car insurance, home insurance, travel insurance, and more. Car insurance, in particular, is mandatory in Malaysia, providing protection against accidents and unforeseen damages. Home insurance safeguards properties from various risks, and travel insurance offers peace of mind during domestic and international journeys.

Takaful

Takaful, an Islamic insurance concept, has gained prominence in Malaysia. Rooted in Sharia principles, Takaful operates on the basis of mutual cooperation, where participants contribute to a fund that provides financial support in times of need. Takaful products range from family protection to business and health coverage, offering Malaysians a Sharia-compliant alternative to conventional insurance.

Conclusion

In Malaysia, insurance is more than just a financial instrument; it is a pillar of stability that empowers individuals and businesses to face the uncertainties of life with confidence. From traditional life and general insurance to the Sharia-compliant Takaful, the diverse range of insurance products reflects the industry’s commitment to meeting the unique needs of Malaysians. As the industry continues to evolve, embracing innovation and adapting to changing dynamics, the future of insurance in Malaysia looks promising, ensuring that individuals and businesses alike can navigate the future with resilience and security.