PIAM: Motor Insurance Still in the Red, EV Boom Adds New Risks

Malaysia’s insurance industry recorded steady growth in 1H2025, but the motor segment, the largest part of the business, remains in the red.

The General Insurance Association of Malaysia (PIAM) reported that total premiums grew 4% to RM12.3 billion during the period.

However, motor insurance, which accounts for about 43% of the industry’s portfolio, continued to post underwriting losses with a combined ratio of 102.2%.

This means insurers are still paying out more in claims and expenses than they earn in premiums, even though motor premiums rose 5.7% year-on-year to RM5.3 billion. PIAM said the losses were mainly due to higher accident rates, costlier repairs and spare parts inflation.

Road accidents have climbed to 115 cases per 100,000 population, while the cost of vehicle components has risen by an average of 10% a year since 2021, largely because of reliance on imported parts.

Mr. Chua Kim Soon, CEO of PIAM,  Mr. Ng Kok Kheng, Chairman of PIAM and Mr. Antony Lee, Deputy Chairman of PIAM

The situation is further complicated by the rapid rise of electric vehicles. EV sales surged 91.4% in the first half of this year, now making up 3.4% of all new car sales. The growth has been driven by import and excise duty exemptions that will end in 2025.

PIAM CEO Chua Kim Soon said EVs have introduced new risks for insurers. “Accidents involving electric vehicles can be far more complex and costly to handle than those involving conventional cars,” he said. “In some cases, the damage is so severe that the vehicle cannot be repaired at all.”

Chua said EVs differ from conventional vehicles in how they are repaired and depreciate, creating a unique risk profile. He added that Malaysia still lacks a mature battery repair ecosystem, which increases claims costs when serious accidents occur.

For now, Bank Negara Malaysia’s (BNM) semi-regulated pricing framework has kept EV premiums relatively stable.

However, in more open markets such as the United Kingdom, insuring an EV can cost nearly twice as much as a petrol vehicle because of higher repair costs and limited specialist workshops.

UK insurers also consider a driver’s age, experience and location, which can significantly raise premiums for younger or higher-risk drivers.

PIAM Deputy Chairman Anthony Lee noted that while EVs are involved in fewer accidents, they tend to be more severe, especially among younger drivers in high-powered models. He said EV premiums in Malaysia will likely rise over time to reflect these risks, although any change will depend on BNM’s approval.

Despite growth in other insurance lines, Malaysia’s motor segment remains under pressure. Until costs, regulations and EV repair capabilities improve, the business will continue to face tough conditions even as the country moves toward an electric future.