The motor insurance industry in Malaysia is currently facing challenges, as indicated by the latest figures from the General Insurance Association of Malaysia (PIAM), presented at a media briefing yesterday. Despite being the industry’s largest business line, contributing RM10.9 billion and accounting for 45.2% of all premiums, the motor segment recorded an underwriting loss of RM289.3 million in 2025.
Motor sector growth slowed to 5.0% year-on-year, down from 6.7% in 2024. The segment’s combined ratio of 103%, which is a marginal 0.7-point improvement from 103.7% the previous year, indicates that claims payouts continue to exceed premiums collected. These cost pressures, particularly in the private car segment, strain the shared pool that funds policyholder claims.
High claim frequency remains a primary driver of these losses, staying above 7% for private car owners in 2025. Data confirms that high-volume models like the Proton Saga are major contributors to accident frequency, particularly among younger drivers.
However, rising claim severity poses a more significant financial challenge, with average costs climbing to RM8,831 in 2025. This spike is attributed to spare-parts inflation and increased labour costs, impacting popular models like the Proton X50. Beyond own-vehicle damage, Third Party Property Damage (TPPD) claims have also seen substantial increases.
Technology risks further complicate the landscape. While ADAS features are aimed at enhancing safety, they have fundamentally altered risk profiles. Minor collisions now necessitate replacing expensive sensors and cameras, alongside costly software recalibrations and complex windscreen replacements.
To mitigate these risks, the industry is leaning into digital infrastructure. The Digital Roadside Assistance (DRA) application aims to enhance claims transparency and provide authorised towing, protecting consumers from unauthorised touts. Additionally, PIAM’s collaboration with VTREC continues to focus on reducing vehicle theft and accident rates through education.
The industry also remains agile regarding climate risks; insurers expedited support following major incidents like the December 2025 Hat Yai floods. Despite these automotive challenges, the broader general insurance sector remains operationally strong, recording a Gross Written Premium of RM24.2 billion in 2025 and an overall underwriting profit of RM1.2 billion, with a healthy combined ratio of 93%.
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