The Malaysian Insight

THE Covid-19 pandemic has served as a wake-up call on the uncertainty of life and reordering priorities, said the insurance industry.

Statistics revealed that Malaysians are taking refuge in purchasing insurance as a health and financial protection for themselves and their loved ones during this unprecedented time.

For the first half of 2020, “ordinary life policies” grew 1.9% (242,401 units) for individual new policies while group policies recorded 4.6% growth (11,027 units), according to an industry performance report by the Life Insurance Association of Malaysia (Liam).

The industry increased its coverage for “ordinary life policies” by 21.4% to reach RM10.8 billion.

“The Covid-19 pandemic has increased awareness among Malaysians on the importance of life-insurance protection.

“The role of life insurance has become even more important as an essential financial tool to reduce uncertainties,” said Liam president Loh Guat Lan.

During the movement-control order (MCO), there was also a surge in direct channel sales for “temporary insurance”, “critical illness insurance” and “medical and health insurance”.

MSIG Malaysia chief executive officer Chua Seck Guan said: “Individuals are looking for Covid-19 coverage to complement their insurance policies.

“We are also seeing requests for ‘infectious and contagious disease’ coverage for business interruption policies.”

To meet the demand, insurers are also introducing new products to provide better protection.

“MSIG was one of the first few general insurers which provide Covid-19 inconvenience benefits for some of our personal accident products and SME business products,” Chua said.

Policy tweaks

Liam said countless Malaysians have lost their jobs and suffered a steep drop in income. Under such circumstances, insurers are responding in some ways to help the public.

“The industry has granted a 90-day deferment period or no-lapse guarantee for three months for policyholders who are impacted by this pandemic,” said Mark O’Dell, CEO of Liam.

“During this period, insurance companies will continue to provide insurance protection to affected policy holders if they are not able to pay for their premiums.

Affected policy holders must apply to their insurance companies to get approval before they can benefit from this relief measure.”

Policy holders who qualify for the relief include Covid-19 positive patients and mandatory home-quarantined individuals. It also covers SMEs, the self-employed and individuals who have suffered income loss.

To date, more than one million policy holders have been granted the relief, with total premiums valued at more than RM1.6 billion. The deferment is still open until December 31.

O’Dell added that other forms of support include allowing policy holders to restructure their policy features, such as lowering the sum assured or temporarily shortening the policy duration, so that they can keep their insurance protection.

Life insurers have also given financial assistance to Covid-19-stricken families, including cash benefits, hospitalisation allowance and lump-sum death or compassionate benefits until year-end.

Despite a majority of the medical policies or certificates carrying an exclusion on communicable diseases, the Malaysian life insurers and takaful operators are giving leniency to provide insurance for Covid-19 victims nonetheless.

In the overall performance report, the life insurance industry registered a drop of 12.6% in total premiums for the first half of 2020.

The decline is mainly in “investment-linked policies”, attributed to the travel restrictions ordered by the government, that have limited the face-to-face interaction by agents to explain the unique policy features to potential clients.

On the outlook for the second half of 2020, the industry expects to achieve a single-digit growth. – November 12, 2020.