Malaysia Insurance Information

CIA link to demographic/economic data on Malaysia

General Malaysia Insurance Information

• Compulsory Insurance:
  
  1. Third Party Automobile Liability;
  2. Workers’ Compensation and
  3. Social Security in all of West Malaysia.
• Non-Admitted Insurance:
  Prohibited except when local capacity has been exhausted and approval given by the Finance Ministry.
• Policy Wordings & Rates / Tariffs Controlled:
  Automobile Liability, Workers’ Compensation, Social Security, Fire wordings are subject to approval. Tariffs for these coverages are strictly controlled.
• Policy Language:
  English.
• Types of Insurance Restricted to Government Institutions:
  25% of all fire (property) and personal accident, 20% of all other classes except for Aviation and Automobile (10%) are ceded to Malaysian National Reinsurance Berhad.
• Policy Currency:
  ringgit (MYR). U.S. $ insurance is not available.
• Currency Restrictions / Exchange Controls:
  No restrictions other than the exchange of foreign currency is controlled by the Central Bank.
• Policy Period:
  Annual. Long Term Agreements (LTAs) are not available.
• Cancellation Provisions:
  Varies by policy. Check cancellation provisions.
• Premium Tax, etc. paid by Insured:
  A Stamp Duty of M$2 per policy or endorsement for policy period extension. A 5% ‘service’ tax on gross premiums is levied on all business policies. 5% of reinsurance ceded abroad is taxed at the prevailing rate.
• Insurance Companies:
  Foreign insurers may operate by obtaining a license as stipulated by the Insurance Act.
• Brokers:
  All brokers must be licensed.
• Brokerage Commissions:
  Fire - 15%;
  Automobile - 10%;
  Marine- 15%;
  Boiler / Engineering - 15%;
  Other Lines - 25%.
  Commissions cannot be paid to foreign brokers not registered locally.
  
• Broker of Record Letters:
  No legal requirement but a good business practice.
• Reinsurance:
  See ‘ Classes of Insurance Reserved for Government Institutions” above. Only 95% of reinsurance cessions abroad are tax deductible. Malaysian Re receives up to 30% of Property premiums, 10% of Motor premiums and 15% of premiums on other lines (excluding aviation). When facultative reinsurance is used, a 15% cession (subject to limits) is made to Malaysian Re. There are a few additional rules so careful local advice required.
• Local Natural Hazards:
  Flood.
• Other Information:
  

Property Insurance

• Fire:
  Standard fire perils include - fire, lightning. Aircraft, explosion, earthquake, flood, storm / tempest, burst water pipe, riot / civil commotion, malicious damage, windstorm / hurricane, vehicle impact are available in the market for an additional premium charge.
• All Risk:
  Only available for Contractors and related operations (e.g., Machinery Installation, Contractors Equipment, etc.).
• Coinsurance:
  100%.
• Blanket Insurance:
  Available for stock and contents.
• Business Interruption:
  UK Loss of Profits and US Gross Earnings forms available.
• Replacement Cost:
  Available.
• Discount for fire protection equipment / systems: Rates can be discounted to a maximum of 50%.

Boiler & Machinery / Machinery Breakdown / Engineering

• Wordings:
  Comprehensive forms available following either UK or U.S. wordings. Inspections are required and may be covered under the policy.

  General / Public Liability

• Available Wordings:
  Comprehensive forms available including Product Liability, Contingent Automobile Liability, etc.
• Comments:
  Coverage is written on an occurrence basis. Product Recall coverage is not available.

Automobile / Motor

• Compulsory Limits:
  Bodily Injury and Death is unlimited; Property Damage minimum M$3,000,000.
• Comments:
  Insured and any licensed individual driving with Insured’s permission is covered. Passengers are deemed to be Third Parties and also therefore covered. This coverage is mandatory and subject to tariff rating.

Workers’ Compensation

• Comments:
  All workers are subject to the Workmens’ Compensation Act of 1952 (revised 1982) and the Employees Social Security Act of 1969.

  Workers’ Compensation insurance is required for all migrant and manual workers earning less than a specified amount; however, due to the Social Security Scheme now dominating the Malaysian landscape, the demand for Workers’ Compensation insurance is low.

Marine

• Available Wordings:
  Cargo and Hull risks follow the Institute of London Underwriters’ terms, clauses. Cargo War Risks rates follow London scale.

Crime

• Available Coverages:
  UK and U.S. usual forms available. UK policy forms follow the terms of the Institute of London Underwriters clauses. Rates for Cargo War and Strikes follow the London market schedule.