Up to 60 per cent of Malaysians between 20 and 40-years-old are planning to buy life or health insurance products in the next 12 months, representing huge business opportunities for insurers here.
The Generation X and Y segment’s strong need for insurance and financial planning is fuelled by worries about medical expenses and the risk of living longer, a survey sponsored by global reinsurance firm Swiss Re revealed.
“The two key drivers for insurance purchases are getting a serious illness (60 per cent) and the inability to pay for long term expenses (57 per cent),” Swiss Re’s director (Client Markets) Eric Gan said.
The study shows that 61 per cent of the respondents in Malaysia are concerned about the amount they have to pay for medical expenses relating to major illness, while 62 per cent are concerned that their medical or health insurance premium will increase beyond their affordability in the future.
The “Swiss Re Survey of Risk Appetite: Asia-Pacific 201″ gathered insights on the risk-taking attitudes as well as insurance needs and buying behaviours of consumers between 20- and 40-years-old.
The study covered 13,800 people in 11 major Asia-Pacific cities.
Malaysians tend to underestimate their life expectancy by 15 years when comparing their self-perceived average life expectancy to the official average life expectancy of 75 years old.
The perception gap was the largest in the Asia-Pacific, followed by Japan (9 years), Singapore and Hong Kong (both 7 years), suggesting a significant longevity risk.
“This large perception gap should ring an alarm bell, as underestimating life expectancy can be a risk in the sense that people may not plan sufficiently to meet their financial needs after retirement,” said Gan.
He said both the public and private sectors must act together to ensure that living longer remains a benefit to society, rather than a financial burden.
“In particular, the insurance industry can play a key role in raising public awareness of longevity risks and the importance of personal financial planning at an early age, as well as in offering suitable products and services for tackling the challenge,” he said.
An overwhelming majority of respondents also prefer to buy insurance through insurance agents (81 per cent) and banks (31 per cent).
“Insurers must demonstrate the benefits of insurance and their strong value propositions in order to meet the specific needs of consumers who consider financial soundness (43 per cent), reputation (37 per cent) and value for money (30 per cent) as the most important criteria for choosing an insurance company,” he added.
On the takaful market, the study noted that only a small portion of Muslim respondents in Malaysia and Indonesia have bought Islamic insurance products.
“An overwhelming majority of the respondents either do not know or have limited knowledge of (Islamic insurance) products, indicating consumer education is clearly needed.
It also found that Malaysians are generally more risk averse compared with their Asia-Pacific counterparts, including Singapore.
The survey was conducted in April and May in Australia, Singapore, South Korea, Taiwan, China, India, Indonesia, Vietnam and Malaysia.
BTimes
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