The insurance regulator Bank Negara Malaysia (BNM) is currently finalising reforms to insurance regulations which including increased oversight of third party agents selling life insurance.
“Those who do not have long-term commitment in the industry will be squeezed out, as regulatory changes will make it tough for part-time insurance agents to survive.
“Those who survive will become professionals and eventually start to form their own companies,” Smith told Malaysian daily The Star.
Malaysia’s life sector
A report by consultancy firm Fast Market Research published last year, found that agencies and bancassurance collectively accounted for 89.6% of the life insurer’s new business written premium in 2015, while brokers accounted for the remaining 10.4%.
Malaysia life sector is highly concentrated, 10 companies, including Zurich Malaysia, accounting for 77.5% of the segment’s gross written premium in 2015.
There is currently a freeze on the issue of new insurance licences by BNM, although BNM has hinted it may be open to consider applications on a case by case basis.
Product pricing
As part of the reforms, BNM will also remove set tariffs for life insurance products.
Under the new regime, set to be implemented in phases starting later this year, policy pricing will be based on risk analysis, including personalised driver and vehicle profiling, rather than set by the regulator.
As a result, Smith said Zurich Malaysia’s focus this year will be “tweaking products based on consumers’ concerns”, with the most pressing being investing in a subdued market.
“Given the changes in regulations, we are able to price our products differently, spread our distribution channels and online capabilities in many ways,” explained Smith.
He added that Zurich Malaysia is currently in discussions with a lifestyle consumer retail website, but stopped short of disclosing any further details.
Smith said he expects the insurance industry to be transformed over the next decade, changing the experience that consumers and businesses have with insurance.
MAA Takaful purchase
Smith’s comments come almost a year after Zurich completed the acquisition MAA Takaful for $134.6m (£92.7m, €117m), giving Europe’s fifth biggest insurer a foothold in the world’s second largest Islamic insurance market.
“It’s a solid acquisition in its own right, but also act as a development centre from which Zurich can learn and ultimately export skills, capabilities and knowledge in this field to other parts of the world,” said Smith.
“Our acquisitions here in Malaysia are a testament that it is an important market for Zurich,” he added.
