While motor insurance remains the general 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 year.
At a combined ratio of 103%, this reflects that claims payout exceeded premiums collected, said the General Insurance Association of Malaysia (PIAM). The rising number of claims and the severity of these 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 private cars remained above 7% in 2025, adding that models such as the Proton X50 and X70 showed a higher frequency of claims, concentrated among younger drivers of these vehicles. At the same time, claim severity had also risen considerably, with the average cost per claim increasing by about 20% to RM8,831 in 2025, notably for models such as the Proton Saga and X50.
The reason for this rise was due to an increase in the price of spare parts, according to PIAM CEO Chua Kim Soon. “In the case of the X50 and X70, most of these parts are imported from China, so that’s where the cost impact is. When you import those spare parts, then you have that price inflation impact on the repair cost. That’s basically the main reason why the average claims cost for these vehicles has spiked up,” he said.
As for the percentage 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 know that the spare parts inflation increase on a year-to-year basis is on a single-digit level. That for some models is obviously higher than others – if you talk about some luxury vehicles, then definitely the spare parts for these will be slightly higher,” he explained.
While the premium for electric vehicles (EVs) have not gone up, Chua said that PIAM is looking into the insurance coverage structure for these, given the rising repair costs associated with the technology in them, including advanced driving assistance system (ADAS). He said that while the technology may help reduce accidents and save lives, it can also spike up the severity of repair costs when accidents do occur.
“If you 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 cost, and that’s one factor. The other is the ADAS that feature on these cars. Because there are sensors and associated electronic control units (ECUs) all over a vehicle, when you have an accident, especially in frontal collisions, those parts also need to be replaced, and that adds to the cost,” he said.
On the long-standing topic of motor insurance liberalisation, he said the framework for phased liberalisation is still continuing to take place. “We are trying to move towards a more risk-based pricing. This will help consumers, particularly safe drivers, through discounts so that they can enjoy a better premium. At the moment, good drivers are to some extent subsidising the bad drivers right now,” he said.
How – and when – all this will be eventually fleshed out of course remains to be seen, as it has been nearly a decade since the matter first took flight.
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