Malaysia's motor insurers face mounting losses as claims surge in 2025
Malaysia’s motor insurance sector is facing growing financial strain. New data shows the industry operated at a loss in 2025, with rising claims and external pressures squeezing profitability. Despite efforts to keep premiums stable, insurers warn that sustainability remains under threat. The motor insurance market recorded a combined ratio of 103% last year, meaning it paid out more in claims than it earned in premiums. Private car insurance alone saw a loss ratio of 77%, reflecting the scale of the challenge. Over the past six to seven years, underwriting losses have totalled nearly RM290 million, with only two profitable years in that period.
Average motor claims have surged by 20%, climbing from around RM7,000 to RM8,800. Higher repair costs, expensive imported spare parts, and larger court settlements are driving the increase. Insurers also highlight the growing impact of climate-related risks, which are adding to financial pressures.
While premiums remain broadly affordable for now, the industry stresses that controlling claims costs will be vital. Without action, rising expenses could push premiums higher, making cover less accessible for policyholders. The sector is now focused on balancing affordability with long-term sustainability. However, geopolitical tensions, fuel price hikes, and supply chain disruptions continue to threaten stability. If these pressures persist, further financial strain on insurers—and potentially higher costs for drivers—could follow.
