Best’s Market Segment Report: AM Best Maintains Stable Outlook on Malaysia’s Non-Life Insurance Segment

SINGAPORE--(BUSINESS WIRE)--AM Best is maintaining a stable outlook on Malaysia’s non-life insurance segment, citing regulatory initiatives and economic expansion, which is driving robust premium growth and increasing insurance penetration.

Also supporting the stable outlook on Malaysia’s non-life segment is de-tariffication of motor and fire insurance, as well as measures curbing medical inflation. The Best’s Market Segment Report, “Market Segment Outlook: Malaysia Non-Life Insurance,” notes that motor and fire insurance anchor the market, together accounting for more than 65% of total non-life premiums. Since phased liberalisation of tariffs for these lines began in July 2016, pricing progressively has shifted toward a more risk-based approach. Over time, AM Best expects de-tariffication to drive product innovation, improve service quality, align pricing with underlying risks and enhance market efficiency, although it may pressure underwriting margins over the intermediate term.

“Malaysia’s non-life insurers continue to maintain healthy underwriting profits through disciplined underwriting and effective pricing strategies, supporting the industry’s long-term sustainability. The segment remains poised for continued growth,” said Sin Yee Chuah, senior financial analyst, AM Best.

Malaysia’s non-life segment reported an improved underwriting profit in 2025, with a healthy combined ratio in the low-to-mid-90% range, reflecting sustained underwriting discipline that supported profitability. The country’s economy continues to be supported by resilient domestic demand, particularly household consumption and investment, while strong demand for electrical and electronics exports and continued investment in data centers is providing additional support. However, the stable outlook remains vulnerable to developments in the external environment.

“Malaysia’s high dependence on trade leaves the economy exposed to weaker global demand, higher tariffs and disruptions to regional supply chains,” said Victoria Ohorodnyk, director, head of analytics, AM Best. “Heightened geopolitical tensions could also weigh on exports and business investment.”

Other report takeaways include:

• A pilot phase for the recently introduced RESET Strategy, which introduced a standardised base medical and health insurance/takaful plan with a co-payment feature, is targeted for the second half of 2026 and full rollout is expected by early 2027. The program looks to improve affordability and pricing transparency while addressing long-term medical cost pressures.
• As climate-linked flooding is Malaysia’s primary catastrophe exposure, climate change is projected to increase the frequency and severity of extreme weather events, thus presenting floods as a persistent tail risk for insurers and exposing the segment’s profitability to greater volatility.

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To view current Best’s Market Segment Outlooks, please visit http://www.ambest.com/ratings/RatingOutlook.asp.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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