PIAM chief executive Chua Kim Soon speaks to Malay Mail during an interview. — Picture by Sayuti Zainudin
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By Kenneth Tee
Saturday, 19 Apr 2025 7:00 AM MYT
- Malaysian motor insurance premiums are climbing as daily claims reached a record RM15.1 million in 2023, driven significantly by the rising cost of repairing technologically advanced
- PIAM's chief executive confirms that the increasing severity and frequency of claims directly pressure insurer profitability, making gradual premium hikes necessary to cover
- While overall premiums trend upwards, ongoing tariff liberalisation allows insurers to increasingly factor in driving behaviour, potentially offering better rates to safer drivers while riskier ones may face higher costs.
KUALA LUMPUR, April 19 — In 2023, daily motor insurance claims in Malaysia — covering private cars, motorcycles, and commercial vehicles — averaged RM15.1 million, equating to approximately RM629,000 per hour for the nation’s largest insurance sector.
This figure represents a significant jump from the RM13 million daily average recorded in 2022 and marks the highest increase in five years, according to the General Insurance Association of Malaysia (PIAM).
PIAM chief executive Chua Kim Soon said that alongside the soaring number of registered vehicles in Malaysia, the average cost for Own Damage (OD) claims also rose, primarily due to increasing repair costs.
OD refers to making a claim on one’s own insurance policy in the event of an accident.
This average OD claim cost climbed from RM9,385 in 2022 to RM9,873 in the first half of 2024 (1H2024).
Chiam explained that newer vehicles entering the market often feature enhanced technology and safety equipment, like sensors and cameras, which are more expensive. Consequently, the cost of labour and spare parts required for repairs also increases.
“This has led to a 4.8 per cent increase in the average motor premium to RM676 in 1H2024, mainly driven by the private vehicle segment which makes up 64.8 per cent or almost two-thirds of the mix,” he told Malay Mail in a recent interview.
Rising numbers
According to PIAM’s data:
- For private vehicles, the average OD claim cost was RM9,155 in 2022, rising to RM9,539 in 2023 and RM9,685 in H1-2024.
- Commercial vehicle OD claims averaged RM25,452 in 2022, RM25,727 in 2023, and RM26,692 in H1-2024.
- For motorcycles, the figures were RM4,344 in 2022 and RM4,470 in 2023, before decreasing to RM4,021 in H1-2024.
Regarding average premiums:
- Private vehicle premiums increased from RM741 in 2022 to RM810 in 2023, climbing further to RM857 in H1-2024.
- Commercial vehicle premiums rose from RM1,577 (2022) to RM1,674 (2023) and RM1,742 (H1-2024).
- Motorcycle premiums remained steady at RM156 for 2022 and 2023, dropping slightly to RM154 in H1-2024.
Malaysia, a car loving country
While average premiums have increased over the past two years, Chua said the total loss ratio for all vehicle classes remained within acceptable levels, recorded at 70.1 per cent in 2022 and 67.8 per cent in 2023 respectively.
Private vehicle total loss ratio remained the highest at 72.7 per cent and 70 per cent in 2022 and 2023 respectively, Chua added, attributing this mainly to the increase in registered vehicles on the road and subsequent traffic accidents.
Chua highlighted the importance of the total loss ratio as a key indicator of insurer profitability, noting its upward trend coincides with the rise in motor claims.
“When there are more vehicles on the road, the chances of accidents are higher,” Chua stated, implicitly pointing towards driver behaviour as a contributing factor.
Motor vehicle claims are determined by two factors: claims severity (the cost of a claim) and frequency (the number of claims).
“Severity is also dependent on the types of vehicles on the road where imported vehicles with a higher market value will obviously incur higher repair costs,” he noted.
He explained the relationship between claims trends and premiums: “Total claims severity and frequency triggers soaring premiums, so if you see the trends and numbers start to spike up, obviously the loss ratio is going to spike up as well.”
Illustrating the financial implication, he added: “For every RM100 I receive (as premiums), if I pay RM70 as claims including other management expenses, if that total ratio exceeds RM100 that would mean I am losing money, so over time there will be premium increases to adjust for that.”
Chua also said while premium hikes might occur over time, policyholders with good driving behaviour could see greater reductions offered by insurers through risk profiling.
“Bank Negara Malaysia’s (BNM) phased liberalisation of motor tariffs allows insurers the flexibility to price their motor products differently based on driving behaviour whereby those with poor driving record may have to pay higher premiums and vice versa,” he explained.
He concluded with a reminder about safety: “A vehicle is something that can be replaced but lives cannot be replaced. If you want to get to point A from B fast, do it safely.”
