Rising medical costs, digital transformation to define Malaysian insurance landscape this year
KUALA LUMPUR: The domestic insurance industry is expected to face several key trends this year that will significantly impact the landscape, with rising medical costs being a major concern.
The escalating expenses may lead to higher claims and subsequent premium adjustments, pushing insurers to develop more innovative products that address the root causes of these cost increases.
Meanwhile, digital transformation will continue to accelerate. The licensing of digital insurance and takaful operators is expected to significantly improve market access and close protection gaps.
At the same time, generative artificial intelligence (AI) is increasingly playing a vital role in the industry, especially in the area of enhancing fraud detection, enabling hyperpersonalised services, and streamlining operations through automation.
Furthermore, predictive analytics will allow insurers to anticipate customer needs, while AI-driven efficiency will reduce costs and improve service speed.
Sun Life Malaysia president and country head Raymond Lew said the industry is also witnessing more strategic cross-industry collaborations, which are increasingly vital for insurers.
'Partnerships with healthcare, technology and financial services sectors enable the development of integrated solutions that cater to diverse client needs. Examples include comprehensive health programs, advanced digital platforms, and bundled financial products.
'By delivering seamless, holistic experiences, insurers can significantly enhance client satisfaction, foster long-term loyalty, and improve retention,' he told SunBiz.
Liew said domestic and global economic uncertainties are driving a strong focus on financial inclusion.
He said the industry is actively working to expand insurance and takaful penetration, particularly among underserved communities, to ensure greater financial resilience in the face of these uncertainties.
For 2024, Liew said the Malaysian insurance industry remained resilient, despite rising costs and premium concerns, with investment-linked products leading the market. This lined up with Malaysia's positive economic growth, which grew from 3.6% in 2023 to 5.1% in 2024.
The growth in consumer spending and favourable digital and regulatory reforms, including the comprehensive Policy Document on Licensing and Regulatory Framework for Digital Insurers and Takaful Operators also supported the industry's favourable performance, he added.
Liew said inflation and rising living costs are significantly impacting financial resilience in Malaysia.
He stated that many people prioritise meeting their basic needs, which leaves little space for future savings.
'Escalating costs, from food to medical bills, are creating financial strain,' Liew noted.
He pointed out that Sun Life's Asia Financial Resilience Index 2024 revealed that only 38% of Malaysians have a
financial plan beyond one year ahead.
Furthermore, the respondents listed retirement and savings as their second-highest financial priority, but only 18% currently have a retirement or pension plan to support their goals.
'We recognise the challenges posed by inflation and rising living costs.
'Sun Life is addressing these concerns through increased emphasis on financial literacy programmes, making retirement planning tools more accessible, and developing products that help Malaysians build financial resilience in the face of these economic pressures,' Liew said.
Sun Life's priority remains empowering Malaysians to secure their financial future through better awareness and accessibility to insurance and takaful solutions, he said.
'Legacy planning will be a major focus in 2025, as we continue to bridge knowledge gaps in this crucial area. Our recent insurance literacy survey indicated that 65% of respondents acknowledged the important role of legacy
However, only 15% of respondents have a plan in place.
'A key initiative driving this agenda is our partnership with Alif Satar as Sun Life Malaysia's 2025 ambassador.
'Through initiatives like bite-sized education series, Alif will help deepen public understanding of how takaful supports long-term financial security and family stability,' Liew said.
Beyond education, Sun Life is also focused on growing its agency and bancassurance channels in tandem, providing customised solutions to meet their evolving needs. Such coverage includes legacy solutions for high-net-worth clients, comprehensive family critical illness protection for middle-to-lower-income families, and simple term plans sold online to protect a wider audience.
Liew said, 'We are committed to exploring all avenues to boost our business growth and capabilities. Being a digitally driven enterprise, we are actively intensifying our digital efforts, including investing in technology, digital tools, and analytics to transform operational efficiency.
'We aim to use technology to help our advisers deliver the best possible advice and experiences to our clients.
'For example, we have partnered with Munich Re Automation Solutions, adopting their SaaS underwriting platform, Allfinanz Spark, to streamline and automate the underwriting processes. This enables us to provide quicker, better service and more personalised assessments to clients.'
Globally, Liew said, Sun Life is embracing the generative AI trend with Amazon's AWS.
'Our 'Sun Life Asks' chatbot is a game-changer. It is answering over 10,000 queries a week and saving our team
significant time. In short, by leveraging AWS and generative AI, we are able to scale our operations, reduce costs, and innovate rapidly, ensuring we stay ahead in the competitive insurance landscape,' he said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Malaysia Sun
9 minutes ago
- Malaysia Sun
Malaysia's expanded SST seen having minimal impact on inflation, markets
KUALA LUMPUR, June 13 (Xinhua) -- Malaysia's expanded Sales and Service Tax (SST), set to take effect next month, is expected to have minimal impact on inflation and a neutral effect on markets, economists said, citing exemptions for essential goods and relief measures for businesses. The Malaysian government announced that the expanded SST, effective July 1, aims to strengthen fiscal sustainability. The revised framework includes an increase in the sales tax rate on selected imported and luxury goods, while keeping essential items zero-rated. In addition, the scope of the existing 6 percent service tax will be broadened to cover fee-based financial services, leasing, main contractor construction services, as well as beauty, wellness, and certain private healthcare and education services. Maybank Investment Bank estimated that the changes to the SST framework could add up to 0.25 percentage points to the inflation rate at most, while continuing its project inflation at 2 percent. The bank emphasized that exemptions and cost pass-throughs would play a crucial role in mitigating inflationary effects. CIMB, in a separate note on Tuesday, said the previous service tax hike in March 2024 resulted in a modest 0.1 percentage point increase in services inflation, which quickly eased, indicating limited second-round effects. With external uncertainties, slowing gross domestic product (GDP) growth momentum, and a narrowing output gap, CIMB noted that the inflation outlook does not pose a significant hurdle to potential monetary policy easing. Maybank said the tax changes are likely to have a neutral impact on most sectors, including consumer staples, discretionary goods, construction materials, and agriculture.
Malaysia Sun
9 minutes ago
- Malaysia Sun
Malaysian businesses increase connections with China, HSBC survey shows
KUALA LUMPUR, June 13 (Xinhua) -- Malaysian businesses are adapting their trade strategy to significantly increase connections with China (61 percent) amid global uncertainties, a survey by HSBC showed. The bank said in a statement on Thursday that Malaysian businesses have been hit with surging costs and supply chain disruptions and are having to rethink their strategy and planned investments as U.S. tariffs and shifting trade policies continue to impact their enterprises. Considering current trade dynamics, Malaysian businesses have also been keen on increasing their connections with South Asia (55 percent) and North Asia (44 percent). Meanwhile, the survey found that currently, the biggest concern for more than half of Malaysian businesses (55 percent) is rising costs due to tariffs and other trade-related factors. In response to this, 42 percent of Malaysian businesses have shifted their focus to domestic markets, prioritizing local customers and reducing international exposure while 40 percent of businesses plan to do the same. In addition, 37 percent of Malaysian businesses have increased their inventory levels to manage supply disruptions, with 49 percent planning to do so as well. Despite global uncertainties, 250 Malaysian-based companies surveyed are optimistic about their international growth but are in need of external strategic advice on the matter. About 91 percent of companies are confident they can grow international trade, ahead of the 89 percent global average. More encouragingly, 73 percent think that trade uncertainty has encouraged their business to evolve and explore new opportunities while 55 percent are seeking strategic advice on international expansion, restructuring or supply chain realignment. "Despite the challenges posed by the uncertain tariff and trade landscape, businesses in Malaysia are demonstrating resilience and adaptability in the way they operate," said Omar Siddiq, chief executive officer and head of banking, HSBC Malaysia. While supply chains may be further reconfigured, he noted there continues to be strong potential for local companies to leverage on Malaysia's strong trade ties particularly in Asia.
BusinessToday
an hour ago
- BusinessToday
Malaysian Businesses Rethink Strategy Amid Rising Trade Costs, HSBC Survey Reveals
Malaysian companies are feeling the pressure of rising trade costs and global supply chain disruptions, forcing a strategic shift in operations and investment plans, according to HSBC's 2025 Global Trade Pulse Survey. The survey, which captured insights from over 5,700 companies across 13 markets — including 250 from Malaysia — revealed that 55% of Malaysian businesses cite rising costs from tariffs and trade policies as their top concern. In response, 42% have already refocused on domestic markets, with another 40% planning to follow suit. Meanwhile, 37% have increased inventory levels to cushion against supply disruptions, with nearly half preparing to do the same. Despite these challenges, Malaysian firms remain optimistic as 91% believe they can grow international trade, surpassing the global average of 89%. Encouragingly, 73% revealed that trade uncertainty has prompted innovation and business evolution, while 55% are actively seeking strategic advice on restructuring, supply chain realignment and overseas expansion. 'The uncertain tariff and trade landscape is driving Malaysian businesses to adapt with remarkable resilience. 'While global supply chains are shifting, Malaysia's strong trade links, particularly in Asia, offer significant growth potential,' HSBC Malaysia Chief Executive Officer and Head of Banking Datuk Omar Saddiq said. The survey also shows a clear pivot in trade focus, with Malaysian businesses increasing engagement with China (61%), South Asia (55%) and North Asia (44%). Interest in markets outside of Asia remains steady, with 32% planning increased trade with both Europe and the US, especially in high-value sectors like electronics and semiconductors. As they navigate cost pressures, 64% of Malaysian firms have adopted new technologies, while nearly half (48%) have developed new products or services to remain competitive. Strategic shifts toward regional growth (57%) and internal efficiency improvements (54%) are also gaining traction, the survey showed. To manage working capital under strain, the survey highlighted that businesses identified cash and liquidity management (64%), better payment terms (56%) and supply chain finance (55%) as the most helpful support measures. With over 70% expecting prolonged cost increases and facing an average 18% drop in revenue, the path forward is clear: Businesses must stay agile and form strong strategic partnerships to thrive in an increasingly complex global trade environment. Related
