Insurance Penetration Spurred

Saturday October 24, 2009

Scheme to spur insurance penetration

PETALING JAYA: The move to set up a micro insurance scheme as proposed in Budget 2010 will expedite the penetration rate of insurance in the country, according to the Life Insurance Association of Malaysia (Liam).

President Md Adnan Md Zain said it would improve the penetration rate of the life insurance sector, which was currently at 41%.

“This rate was considered low compared with other advanced markets, and there was strong potential for the life insurance industry to develop. A micro insurance scheme with premiums as low as RM20 per month will provide financial protection to many small businesses.

“It is important to realise that insurance plans are not only for the high-income earners, but is affordable to a large majority. In this connection, Liam will work closely with the authorities to introduce this insurance product as quickly as possible,” Adnan said.

He said the Liam was also supportive of the additional RM1,000 tax relief that had been granted for annuity premiums offered by insurance companies.

“This incentive is most apt to support the development of retirement schemes by life insurance companies because by the year 2020, Malaysia would have close to 10% of its population above 60 years. Thus, it is important that Malaysians start their financial planning early to continue to enjoy a comfortable lifestyle in their golden years,” Adnan said.

General Insurance Association of Malaysia (PIAM) executive director C.F. Lim said the move by the Government to restructure motor insurance cover for third-party liabilities was positive for sustainable and affordable third-party motor insurance.

PIAM views the restructuring as a necessary development towards ultimate deregulation and liberalisation of the motor and fire insurance sectors which are currently operated under strict tariff regimes.

“This proposed mandatory insurance scheme will also ensure that victims of road accidents and their dependants will receive reasonable and adequate compensation in an efficient and expeditious manner. We look forward to working closely with the relevant government agencies and authorities to develop and implement the proposed third-party scheme as soon as possible,” Lim said.

The Star