‘Raise tax relief to boost insurance penetration rate’
KUALA LUMPUR: While Malaysia’s life and takaful industry’s penetration rate remained stagnant at 55 per cent for the past three years, scepticism in reaching the targeted 75 per cent by 2020 has arisen among industry players.
Bank Negara Malaysia, in its efforts to boost the penetration rate, has among others, introduced the Life Insurance and Family Takaful Framework (Life Framework) in 2015.
AIA Group Ltd Chief Executive Officer/President, Ng Keng Hooi, the first Malaysian to helm a global firm as big as AIA (the world’s second largest life insurer), said giving tax perks for insurance expenses would, to a certain extent, encourage people to buy insurance and take care of their own medical needs.
“The government should increase tax relief for life and medical insurance policies to improve insurance penetration rate in Malaysia,” Ng said in a recent interview with Bernama.
He said unlike developed Western countries, Malaysia did not provide a social safety net and the people had to take care of their own security.
“Hence, we have always been encouraging the government to use fiscal policy and take necessary steps to promote the insurance industry,” he said.
Ng said by providing tax perks, the government would be encouraging the people to take care of their own medical needs.
“The burden will also lessen when it comes to (spending on) the public health segment,” he said.
The Life Insurance Association of Malaysia, since proposing in its 2012 budget wishlist, has also been urging the government to raise tax relief for medical and education insurance premiums, as well as provide a separate tax relief for life insurance premium and the Employees Provident Fund to promote better financial planning for the people.
He said many households in developing countries, including Malaysia, remained severely underinsured.
“For instance, we found out that we only paid out an average claim of between US$10,000 and US$30,000 (US$1= RM4.27) to an individual who was affected by the major airline tragedies - Malaysia Airlines’ MH370 and MH17, as well as Air Asia’s QZ8501. — Bernama