Malaysia’s insurance sector is ‘stable’ because of sound operating profitability, steady market growth, and manageable exposure to investment risks, a new Fitch Ratings report has said.
The agency expect the industry to continue performing. Fitch believe that growth of the Malaysian insurance market will be driven by various government measures, a low penetration rate and wider product reach.
While the ratings agency sees the Malaysian insurance sector as stable, it warned that current market volatility has the potential to effect this.
The report also said that the “…formation of larger insurance conglomerates along with increased foreign ownership will likely intensify market competition.”
Terrence Wong, Director in Fitche’s Insurance team, said that Bank Negara Malaysia’s premium change plan would not have a drastic effect on the industry as a whole.
“Bank Negara Malaysia’s plan to make gradual premium adjustments in motor cover will likely mitigate underwriting losses. However, given the modest premium change, Fitch believes its impact on general insurers’ underwriting profitability will be minimal in 2012,” he said.
