The outlook for the Malaysian insurance sector is very bright, according to AIG Malaysia Insurance Bhd chief executive officer Matt Harris. Reason? There is still much upside potential for certain products while the well-regulated environment provides solid growth.
“We think the (industry) outlook for Malaysia is very rosy. We are fortunate because unlike some neighbouring countries, we are not exposed to typhoons and earthquakes.
“So, there is a lot of comfort (for us) to be an active player in this market,” he said.
The industry had seen solid growth as it was also well-regulated by the central bank, he told reporters after formalising its partnership with MyEG Services Bhd to provide general insurance products online.
“The industry has grown at an average rate of 8% in the past five years and we do not see why this will not continue in the next five years.
“It (growth rate) could even be pushed to double digits as there are a number of products which are under-penetrated,” he said, adding that there were also vast opportunities in the commercial segment.
According to Harris, 65% of AIG Malaysia's portfolio was from the consumer segment, which was growing at a double-digit rate, while its commercial products could be growing at a higher rate.
“We see some good growth in the liabilities sector and indemnity products, as it is getting more important for businesses to insure in areas where they are exposed to risks,” he explained.
He also said the industry could do more to raise awareness of the pitfalls of not having home insurance, which he deemed another area of growth.
AIG Malaysia's provisional topline was close to RM580mil for the last financial year and the insurer was looking at 12% to 15% growth in the next three to five years, he added.
Harris also noted that consumers were moving from buying via intermediate channels to direct channels like online.
“Customers who are time poor' would like to buy policies online. We will see a shift in distribution (channels) in time,” he said, adding that its partnership with MyEG would support that change.
In some developed insurance markets, insurance sold through direct channels grew from the baseline from zero to as high as 35% to 40%, he said.
Currently, 60% of AIG Malaysia's revenue came from around 3,000 of its general agents nationwide, 20% to 22% through insurance brokers and the rest through corporate partners, he said.
Both Harris and MyEG group managing director Wong Thean Soon were confident that online insurance sales would catch up with the developed insurance market.
Harris said AIG would kick start the partnership by providing auto insurance, extending that to personal and general insurance within six months.
He declined to reveal the sales target set for this collaboration but said the results from pilot tests had “exceeded expectations”.
Wong opined that many Malaysians were comfortable to transact online, but service providers must provide what people wanted.