While motor insurance stays the final insurance industry’s largest line of business in Malaysia, contributing RM10.9 billion – or 45.2% of total premiums – in 2025, the segment continued to post underwriting losses, with RM289.3 million recorded last 12 months.
At a combined ratio of 103%, this reflects that claims payout exceeded premiums collected, said the General Insurance Association of Malaysia (PIAM). The rising variety of claims and the severity of those were concerns noted by the association at a media briefing on the industry’s performance earlier this week.
It said that the claim frequency for personal cars remained above 7% in 2025, adding that models corresponding to the Proton X50 and X70 showed a better frequency of claims, concentrated amongst younger drivers of those vehicles. At the identical time, claim severity had also risen considerably, with the typical cost per claim increasing by about 20% to RM8,831 in 2025, notably for models corresponding to the Proton Saga and X50.
The rationale for this rise was on account of a rise in the value of spare parts, in accordance with PIAM CEO Chua Kim Soon. “Within the case of the X50 and X70, most of those parts are imported from China, in order that’s where the associated fee impact is. If you import those spare parts, then you’ve got that price inflation impact on the repair cost. That’s mainly the most important reason why the typical claims cost for these vehicles has spiked up,” he said.
As for the share of the spare parts increased that has been observed, Chua said that it was still in single digits. “It varies from model to model. I don’t have the numbers at hand, but I do know that the spare parts inflation increase on a year-to-year basis is on a single-digit level. That for some models is clearly higher than others – should you discuss some luxury vehicles, then definitely the spare parts for these can be barely higher,” he explained.
While the premium for electric vehicles (EVs) haven’t gone up, Chua said that PIAM is looking into the insurance coverage structure for these, given the rising repair costs related to the technology in them, including advanced driving assistance system (ADAS). He said that while the technology may help reduce accidents and save lives, it could actually also spike up the severity of repair costs when accidents do occur.
“When you take a look at EVs, the potential cost impact comes from not only the battery. Depending on the model, the battery normally accounts for about 30 to 50% of the associated fee, and that’s one factor. The opposite is the ADAS that feature on these cars. Because there are sensors and associated electronic control units (ECUs) throughout a vehicle, when you’ve got an accident, especially in frontal collisions, those parts also must be replaced, and that adds to the associated fee,” he said.
On the long-standing topic of motor insurance liberalisation, he said the framework for phased liberalisation remains to be continuing to happen. “We are attempting to maneuver towards a more risk-based pricing. This may help consumers, particularly secure drivers, through discounts in order that they will enjoy a greater premium. In the meanwhile, good drivers are to some extent subsidising the bad drivers straight away,” he said.
How – and when – all this can be eventually fleshed out after all stays to be seen, because it has been nearly a decade because the matter first took flight.
Seeking to sell your automobile? Sell it with Carro.
This Article First Appeared At paultan.org
