Malaysia’s takaful industry maintained stable growth in the first half of 2024, despite moderating contributions and evolving regulatory developments, according to Fitch Ratings’ latest sector monitor.
General takaful contributions rose by 10.5% year-on-year, closely matching the 10.2% growth recorded in the broader non-life insurance sector. This sustained the general takaful market share at 20%, driven primarily by motor coverage, which comprised 66.9% of contributions. Growth in motor business slowed to 2% in 2024 from 11% the previous year.
Family takaful contributions showed marginal recovery, increasing by 0.1% after a 4.7% decline in 2023. Nonetheless, the segment’s market share fell to 40%, down from 44% the year prior, as growth lagged behind the conventional life insurance sector’s 18% rise.
Medical inflation continues to pose challenges for health takaful providers. Fitch noted that the sector has initiated repricing measures, though “the effect is likely to be gradual.” In response, Bank Negara Malaysia (BNM) mandated that operators offer co-payment options for medical and health products from September 2024 to “ensure affordable takaful.”
General Takaful Product Mix in 1H24
Profitability improved across both general and family takaful lines. General takaful reported net income of MYR73.1m (US$16.5m) in 1H24, reversing a MYR47.1m loss in 2023, aided by lower flood-related claims and stable investment income. Family takaful net income surged by 60%, supported by sustained investment returns.
BNM also advanced regulatory reforms during the period. In June 2024, it proposed changes under RBC2 to enhance capital standards, including revisions to solvency thresholds, reserve requirements, and catastrophe risk charges. These are expected to take effect in 2027.
Addressing capacity constraints in the retakaful space, BNM issued a policy effective January 2025 to guide the use of conventional reinsurance under hajah (need) or darurah (necessity), allowing flexibility when Islamic alternatives are insufficient.
Fitch anticipates continued industry growth in 2025, supported by macroeconomic stability, digitalisation, and “increased awareness of takaful products.”
