Malaysian Business Insurance, How Much Does It Cost for SME’s?

Every Malaysian business insurance policy is as unique as the products and services the business provides. There’s no ‘one size fits all’ as Malaysian business insurance prices can vary greatly from business to business.

In this article we’ll cover a brief current history of insurance policies and core insurances that every business needs. We’ll also cover some examples of specialized insurances according to industry and business size. We also have a free Malaysian business insurance calculator you can use to get a quote unique to your business.

Brief Current History.

For the year ending 2016, the general Malaysian Insurance Industry recorded a Gross Written premium of RM17 billion, an increase of 1.1% compared to the previous year.

The biggest contributor came from motor and fire insurance. It contributes almost 65% of total general insurance premium in the market. In recent years, government regulations have made business insurance easier to obtain and at a cheaper cost.

Initiatives such as detariffication of business insurance premium have led to price wars between insurance companies. Recent regulations by “Bank Negara” state that that the insured are now free to choose their own insurance company. Businesses are no longer have to be insured with their current financial institution.

Bank Negara’s initiative has now radically changed the business insurance landscape in Malaysia. Insurance companies are now encouraged to innovate their product offering to stay relevant and capture the growing market. More products are being formulated to cater to each market needs. Which basically means a win for the consumers.

Apart from that, insurance companies have also decided to have their own direct distribution channel to target business owners. Companies such as AXA and Tokio Marine are actively pursuing a direct distribution channel as it will help lower the overall cost of insurance premiums to business owners.

The domination of agents in insurance industry especially the commercial insurance segment is prevalent. Majority of business insurance is covered by agents who have served the market for more than 20 years and have maintained an old school approach towards customer service


Core Types of Business Insurance.

Malaysian Business Insurance consists of various types of policies. The 2 main core policies are Fire Insurance & Burglary Insurance. Business Fire Insurance is essentially an insurance to protect your building and equipment from lightning and fire damage.

Malaysian Business Fire Insurance.

There are various types of fire insurance classified by their sum insured. A building with sum insured of 50 million Ringgit and above is classified self-rating and requires its own fire rating. Fire insurance for sum insured below 10 million Ringgit is considered as Small Medium Enterprise and follows a guidebook set by PIAM (General Insurance Industry Board Malaysia).

Malaysian Business Burglary Insurance.

The second core business insurance policy is Burglary Insurance. Burglary insurance rates are an open book tariff that is decided by each insurance company. The rates are decided by various factors such as presence of alarm systems, type of stocks stored, type of business & etc.

The majority of burglary policies issued for SME Business are considered generally reasonable in price. However, the coverage offered varies with perils. The higher number of perils insured, the higher the premium. The main concern faced by business insurance policies owners are claim payable scenario and supporting documentation for claim to be paid.

The majority of business owners do not provide supporting documents for the claim as their record keeping is not updated. This provides uncertainty and causes insurance companies to reject their claim which happens majority of the time.

Unique Malaysian Business Insurances According to Businesses Types.

With the changing market landscape and digitalization of customer landscape, each business is supposedly to have it’s own business insurance rates which are unique to it’s landscape. Some business classified in the retail industry would need additional policies compared to their peers in the industry.

For example, franchisors of famous convenience stores in Malaysia would need to insure their company takes up Directors and Officers Liability Insurance. As they are a listed company and the sheer scale of their operations. However, small convenience stores do not need a Directors and Officers Liability Insurance due to the small scale of operation.

Also, if you have a sole proprietor business, workers compensation is not needed as there is only one to two employees. Typically, this applies to florist shops or micro businesses. However, due to changing business landscapes, any business regardless of micro business or large enterprise would need a digital insurance policy to cover their e-commerce website. With the recent hacks & spam by competitors, each business would need to be extra careful with their e-commerce website.

Current Customer Practice.

As viewed on the left, the current customer practice is monotonous and has high levels of bureaucracy. The average time needed to process a policy is 3-5 working days from the date of confirmation of policy.

With the current practice, there is a lot of discrepancy in the presentation of the insurance quotation to the customer. Each Agent will have their own view point of how insurance should be spelled and presented to clients for their easy understanding. This may differ from another insurance professional’s point of view.

Our Malaysian Business Insurance Calculator Solution.

With our invention, we are building a customer-centric online product that is intuitive and responsive. We are re-making the cycle of SME’s getting their business insurance. Our software is based on getting the average premium for business insurance relevant to each industry and small medium enterprises.

SME is widely involved in and propose to the website user. It provides a general view of the industry insurance premium for SME’s. Also our business insurance calculator provides a guideline to open their own negotiation with insurance companies to get an industry rate. Our innovation is simple yet effective in filling the gap between insurance companies and their distribution channel.

With the advent of technology, business owners  now expect to deal with insurance online. In the same way they use consumer friendly online technologies to deal with banking, payroll, accounting or sales. Online technologies equals convenience. The way businesses are treated in the current cycle is also very frustrating and outdated.

We have linked with various insurance companies to use their API system for an online seamless insurance issuance. Our systems allows policies to be issued with only a few click

Proposed Customer Practice.

With our solution, customers can find out the cost of insurance for their industry average between the top 5 insurance companies. Plus the most widely sold insurance policies & the premiums charged for it.

Together with our link up with insurance companies, an immediate online insurance policy can be issued accordingly. Further adding to our library of articles with informative and interactive contents, you will not be facing an issue of discrepancy between what is being told and what is insured at the point of claim.

The benefits of our digital insurance system and the process flow is explained in the videos below.