Insurance can be defined as a form of risk management. Through insurance people pay a specific amount and transfer the risk associated with something to another entity. Insurance is used as a hedge against the risk of an unforeseen and uncertain loss. An insurance provider sells insurance which is bought by a person who becomes the policyholder. The amount of money that a customer pays for a certain amount of risk coverage is known as premium. This insurance premium can be payable monthly, quarterly or yearly.
The insured person receives an insurance document as a promise that the insurance provider will compensate the insured in case of any calamity that results in personal or financial loss.
Insurance in Malaysia
Insurance in Malaysia is a well-developed and functional financial instrument. Several domestic and international entities offer insurance to customers in Malaysia. The insurance product in the country can be divided into two main categories, namely, standard insurance and takaful. While regular insurance refers to normal insurance policies based on standard insurance guidelines, takaful is insurance as per Islamic banking rules. Since, the demand for Islamic banking products is quite high in the country, takaful coverage is a sought-after insurance stream.
Takaful is a protection scheme in which based on Sharia principles, you submit a small participative amount (tabarru) and you take a contract (aqad) to become one of the participants to mutually agree and help each other in case any of the participants need monetary help due to unforeseen loss.
Similar to other popular financial products and services, insurance too could be applied for from the comfort of your house. Many insurance providers and banks offer insurance schemes that can be availed directly through their official websites.
However, in most cases, there is always some or the other official documentation work for which customers need to personally visit the insurance provider's office. A new and popular trend that has emerged is that insurance companies instead of making customers visit their offices, send their company representatives to customers' place in order to get all the formalities completed. Customers can suggest a suitable time for visit, to these representatives and can perform all the required formalities from the comfort of their home.
Types of Insurance
Insurance is a universal set that contains several types of insurance that are offered by service providers to customers. Some of the most prominent and popular insurance types in Malaysia are listed below.
Life insurance is the insurance under which financial assistance is offered to the insured or their beneficiaries in the unfortunate event of death of the insurance policyholder. This type of insurance is offered both under regular and takaful variants. Life insurance schemes generally have a longer period of policy and as such the premium for life insurance policies is either paid monthly or quarterly or annually.
- Health insurance
Health insurance under the life insurance bracket is financial assistance offered in case the insured person suffers from a major illness that requires medical treatment, hospitalization and even surgery. Medical and health insurance schemes even provide you with a regular income during days when you are medically unfit and cannot work to earn.
- Whole Life
Whole life insurance refers to the insurance scheme in which the beneficiaries of the insured person are offered financial help in the unfortunate event of demise of the insured.
The endowment insurance plan is a mix of savings as well as protection in which a specific amount is paid to the insured person or his beneficiaries in case of permanent disability or death of the policy holder.
Term insurance as the name itself depicts, offers insurance for a specific period of time until which the insured pays premium. After that the premium payment stops and the money is paid to the beneficiaries in case of sad demise of policyholder.
Investment linked insurance schemes are policies where the premium paid by customers is used to buy life insurance protection as well as units in a fund managed by the insurance provider. This offers both protection as well as growth of funds to customers. This is a more aggressive but return-oriented insurance offering.
- Life Annuity Plan
This is an insurance plan in which insurance provider charges a premium and then gives a series of payments to the insured until his/her demise.
General insurance refers to the insurance taken for all insurance needs related not essentially to life.
- Fire insurance/House Owner's Policy/ House Holders Policy
As the name itself suggests, fire insurance is offered by insurance companies to provide customers with protection against the unforeseen event of fire. Other insurance products such as house owners policy and house holders policy are aimed at fulfilling the insurance needs of customers who own a house or stay in a rented one.
- Motor Insurance
Motor insurance refers to insurance that is offered as financial assistance when your vehicle meets an accident or undergoes a major overhaul.
- Personal Accident Insurance
Personal accident insurance is offered for safeguarding insured persona against financial trouble resulting from death or disability due to accident.
- Travel Insurance
Travel insurance is insurance policy that is availed by customer when they go on a tour or while they are traveling. This insurance policy pays financial sum to the insured or his/her beneficiaries in case death or disability befall the insured during travel.
Top 10 insurance companies in MalaysiaTop 10 Insurance Companies in Malaysia Our top picks for best insurance companies in Malaysia is based on several factors, such as product offering, brand name, claim settlements and things like customer feedback etc. These companies have existed in Malaysia and hold a base here in one of the main cities in the country.
- AIA Insurance:
AIA Malaysia has operated in the country for more than 60 years and is often quoted as being the largest insurance providing company in the nation. The tied up agency force of AIA is close to 17,000 strong along with exclusive bancassurance partnership, which helps serve more than 2.6 million policy holders in Malaysia. People not only have access to great life insurance products but also a wide range of general insurance. From medical insurance, that provides instant source of financial aid at emergencies to car insurance product based on the Malaysian car insurance requirements.AIA Insurance is said to to majorly be the largest of its kind because of its humongous multichannel distribution system, which is majorly driven with the help of their agency force that is both dense and efficient.
- ACE Insurance:
A part of the ACE Group ACE Jerneh Insurance is said to be one of the largest insurance providers in the world, operating in 54 countries around the globe. ACE insurance is supposed to highly specialised in insurance solutions for both personal and commercial property insurance, accident insurance, casualty insurance, along with the regular life insurance products. Like AIA Insurance, ACE Jerneh also thrives on their large multi channel distribution system. They are more than 2000 agents strong supporting 23 branch offices across the country. Some of their major general insurance products include Health and Life insurance plans, motor insurance and even dental insurance.
- AIG Insurance:
AIG Insurance have always been known to industry leader, when it comes to insurance for property casualty along with retirement insurance and of course the quintessential life and mortgage insurance. They are even well reputed for their aircraft leasing insurance products. Based out of Kuala Lumpur, in Malaysia as early as 1953 was eventually locally incorporates in 2008. In less than a decade the company is the proud owner of 14 offices supported by over 3000 professional agents, staff and brokers. AIG Insurance is indeed said to be one of the best insurance providers in the world with over 88 million satisfied customers, globally.
- Allianz Insurance:
Allianz is said to be stably positioned even when it comes their quarterly earnings results also doing well in the Malaysian stock markets. In the quarter ending in March 2015 the company made over RM 73.6 million which is equal to USD 17.4 million. The company also has 12.2% of the total industry market share as of December, 2013. Allianz has over 35 branches spread across major cities in the country.The customer base is around 24 million people strong with simple microinsurance products, as of 2013. They even released their first Sustainability Report in 2011 to project transparency detailing on their performance that is non - financial. Allianz Insurance, established only 14 years ago have established a stronghold in the insurance industry in Malaysia.
- AXA Affin Insurance:
AXA Affin Insurance has been operating in Malaysia with a license as an insurance provider since 1975. So far they have served over 500,000 customers and counting. It has a well spread network of offices with 22 branches all over Malaysia and counting. Some of the major highlights of their insurance product include low premium rates, easy paper work, great customer name and a brand name recognised all over the World. They also have a reasonable turn around time for claim settlements at 10 working days. They specialise in general insurance products including car and medical insurance.
- Etiqa Insurance:
This insurance provider is an arm of the Maybank Group which is one of the largest financial institutions in Malaysia. Their main intention and goal is to eradicate complexities of insurance products especially when it comes to understanding complicated jargons or hidden clauses in policies that not only confuse people but often let them feeling cheated. They do have aggressive approach with a gigantic network of over 27,000 Etiqa Insurance agents operating across Malaysia. The range of products is bespoked to the needs and requirements of the Malaysian residents for both regular life insurance and general insurance products as well savings and retirement plans.
- Kurnia Insurance:
Established and based out of Petaling Jaya since 1977 in Malaysia Kurnia insurance, provides comprehensive insurance solutions for casualty, property, medical, motor, accident, and something as exclusive as pet insurance. Kurnia Insurance also has huge distribution channel with over 7000 agents and counting. Under Ambank this company is well reputed in general insurance products and have a very positive image when it comes to their corporate profile.
- Lonpac Insurance:
Lonpac has been operating in Malaysia since 1999. Within less than 2 decades in the country they have already grown as a company to have a network of 21 branches in the country and an office in Singapore. The company provides a wide variety of insurance products that include health insurance. comprehensive insurance cover for personal accidental protection, vehicles etc. Lonpac Insurance has both personal and business based insurance products based on the prospective customer’s requirements from insurance. Lonpac Insurance Bhd is said to be one of the leading market players in the industry with experience in Malaysia with in-depth knowledge of customer relations as well as bespoking their service to meet consumer needs.
- MSIG Insurance:
One of the quickest ways to spot a company’s performance is to see how they are doing in the market. Hence it is essential to quote that this insurance providing company made a gross premium sum of RM1.5 Billion in 2014. In 2014, MSIG Malaysia had an excellent market share of 8.7%. MSIG insurance also caters commercial insurance along as well as foreign worker insurance. They operate as a subsidiary of MS&AD Insurance Group Holdings, Inc in Malaysia. They are also well-known for having a very efficient customer service base which has become extremely important in the market today.
- RHB Insurance:
This bank operates in all the South-east Asian countries and Myanmar as well and has established themselves in financial products with much efficiency. They have a wide range of general insurance products as well as regular life covers and savings plans when it comes to this industry. They are well known for motor insurance as well. The product range is comprehensive and well-designed. RHB Insurance also has bancassurance products as well.
- What is meant by a participating insurance policy?
A participating insurance policy enables a policyholder to share in the profit of the insurance company.
- How do I know whether an insurance agent is authorized to sell insurance policies?
All authorized insurance agents are supposed to have valid LIAM (Life Insurance Association of Malaysia) identity cards which should be produced when you ask.
- Can I pay policy premiums through the agent?
Yes. Policy premiums can be paid either directly to the insurance provider or via the insurance agent. In both the cases, you should ensure you receive the relevant receipt.
- What if I miss paying my insurance premium on time?
In case you miss paying your insurance premium, a grace period will be given to you after which a certain late payment fee might be levied. In case of repeated or prolonged non-payment of premium, the insurance policy may be canceled or may lapse which can then be renewed by getting in touch with the insurance provider.
- What is a free-look period?
Free-look period is the time that an insurance provider gives its customers to read up the policy and return it if he/she is not satisfied. In such cases, the premium paid by the customer is refunded entirely.
News about Insurances
Public support needed to implement national health insurance policy
The Health Minister, Datuk Seri Dr. S Subramaniam said that there is a need for public support to implement the national health insurance policy. The public cries each time there is an increase in charges. Most doctors in Malaysia want a single payer policy and the multiple provider systems should be managed by the Health Ministry and bridge the gap between public and private hospitals. While this looks good on paper, the implementation will take time.
16th January 2017
Limited pay Insurance Savings plan launched by CIMB and Sun Life
CIMB and Sun Life launched a savings plan with wealth protection and guaranteed benefits. There has been RM21 million sales since the soft launch. This is the latest limited pay insurance savings plan that has been launched by CIMB. This plan is developed exclusively for CIMB and its bancassurance partner. This is a non-participating universal life plan which provides guaranteed wealth preservation of basic premium. It offer potential growth from investment returns. The guaranteed acceptance and enrolment makes it hassle-free for the customers.
21st November 2016
Allianz Malaysia may possibly take over HSBC Amanah Takaful
There have been talks by Allianz to acquire 100% equity interest in HSBC Amanah Takaful as it wants to secure Islamic insurance business. Allianz said that Bank Negara had no objection in principle for the company to begin the negotiations. The central bank’s approval will be subject to all the parties concluding their negotiations within 6 months. Before entering the agreement, the parties will have to get prior written approval from Bank Negara or the Finance Minister. Allianz had approached other banks in Malaysia, but they were mostly overpriced.
4th November 2016
BNM Governor says that the Malaysian Insurance industry is not up to the mark yet
Bank Negara Malaysia Governor, Datuk Muhammad Ibrahim says that the insurance industry has not delivered the required results that were expected. The total assets of insurance and takaful sector has expanded at an annual rate of 13.3%. He pointed out that the growth of the insurance industry has started to plateau in the recent years. He also said that the industry has been approaching the point of inflection in the S-curve. He however mentioned that the growth potential for the insurance industry remains significant.
27th October 2016
Several insurance companies getting investigated by MyCC
Several general insurance companies are being investigated by the Malaysia Competition Commission for allegedly being involved in the anti-competition agreements in the motor vehicle repair industry. The commercial activities are being investigated, especially activities concerning discounts, labour cost, etc. MyCC will monitor the activities of the associations to ensure that the related industries are not involved in activities that can prevent, prohibit and interfere with the competition in the market. If there has been any violation of the act, it will result in monetary penalty of 10% of the total revenue throughout the violation period.
25th October 2016
AmGeneral Insurance Berhad to provide cover for Snatch Thieves
Considering the huge demand for insurance coverage in Malaysia caused by car accidents, AmGeneral Insurance Berhad has decided to provide a lump sum amount of RM1, 500 to insured individuals who have enrolled for its Perfect Rider Plus Personal Accident Protection Plan. The main purpose behind the launch of this additional benefit is to compensate for “Snatch Thieves” in Malaysia.
These days driving on Malaysian roads has become complicated because of poor road condition, and it has lead to many car accidents that have led people seek more insurance coverage. This additional benefit would take care of repairing of broken car windows, windscreens, and loss of personal items from vehicles.
16th May 2016
Hong Leong Assurance Introduces New plan For Disabled
Hong Leong Assurance Bhd (HLA) recently launched the new plan called HLA Prime Living with the aim to help ease the financial burden of those with loss of income due to disability.
In a statement on Thursday, HLA mentioned that this is a simple plan which comes with a hassle-free application process, gives the life assured a yearly allowance upon total and permanent disability or old age disablement as well.
The group also mentioned that the dual income families are generally the trend in Malaysia, and hence would suffer from strained finances if one of the partner become disabled.
Based on a research conducted by Life Insurance and Family Takaful Framework by Bank Negara Malaysia last November, only 55.5% Malaysians were insured as of 2014.
HLA finally added that, “We will continue to drive innovations and provide more value-added products to meet the evolving needs of consumers at different stages of their lives.”
21st April 2016
Longhouses to be covered under insurance policies
Longhouses are in constant danger of being destroyed by landslides, fire, etc. and those whose livelihood depends on farming, jungle-related occupations, fishing, etc. reside mostly in longhouses.
After a recent fire gutted a few longhouses, proposals have been made to make insurance coverage mandatory for all longhouses in the state.
The need for insurance payouts in case of damages is partly due to the government’s inability to fully compensate longhouse owners for the damages to life and property – and insurance companies will be able to disburse funds and aid more efficiently.
8th January 2016
Up to 5% growth expected for Insurance Sector this year
After bagging the top award at the 19th Asia Insurance Industry Awards, MSIG Insurance Company, Malaysia, aims at growing the sector by another 4% to 5% this year.
The company won the award for its continuous efforts and successes in providing efficient insurance products that met the diversified needs of Asian customers.
With a gross written premium of over RM1.15 billion (as in September 2015), the company has a little over 700,000 policyholders.
The growth was slated to be around 8% to 9%, but the Goods and Services Tax and a weakened currency stands as tall obstacles – Malaysian insurers take this on as a challenge and strive for at least 5% growth this year.
8th January 2016
Kampung Ku Insurance Policy to help flood victims in Malaysia.
Now, flood victims in Malaysia can get immediate compensation of RM 1,000 by purchasing the ‘Kampung Ku Insurance Policy’ – a life insurance policy introduced by Allianz General Insurance Company (Malaysia) Berhad. This is a life insurance policy specially designed to help the victims of flood.
The policyholder needs to pay a minimum premium of RM50 and enjoy all the benefits. It is expected the policy would be able to reduce the financial burden of the victims of flood and provide them financial relief. So far, almost 6,000 people in Kemaman district have purchased this policy.
8th January 2016