PIAM: Motor Insurance Posts RM289.3 Mil Loss in 2025, More and Costlier Claims, Notably with Proton Models

Why It Matters

The loss underscores mounting pressure on insurers to rebalance pricing and risk management, while consumers face higher premiums unless reforms accelerate risk‑based discounts.

Key Takeaways

• Motor insurance contributed RM10.9 bn (~$2.4 bn) in 2025, 45% premiums
• Underwriting loss of RM289.3 mn (~$64 mn) gave a 103% combined ratio
• Claim frequency stayed above 7%, driven by younger Proton X50/X70 owners
• Average claim cost rose 20% to RM8,831 (~$1,960) due to parts inflation
• PIAM plans risk‑based pricing and EV coverage reforms as repair costs climb

Pulse Analysis

Malaysia’s motor‑insurance market, accounting for nearly half of all general‑insurance premiums, recorded a stark underwriting loss in 2025. While premium inflow reached RM10.9 bn (about $2.4 bn), the combined ratio of 103% revealed that payouts outpaced earnings, driven by a claim frequency that lingered above 7%. Younger drivers of popular Proton models such as the X50 and X70 were disproportionately represented in the claim pool, inflating both the number and cost of settlements.

A deeper dive points to spare‑part inflation as the chief catalyst for rising claim severity. Many components for the X50 and X70 are imported from China, and even single‑digit price hikes translate into a 20% jump in average claim cost, now around RM8,831 ($1,960). The issue extends to electric vehicles, where battery packs can represent 30‑50% of a car’s value and advanced driver‑assistance systems (ADAS) add a web of sensors and electronic control units that are expensive to replace after a crash. These factors compel insurers to reassess coverage structures and reserve allocations for EVs.

Looking ahead, the General Insurance Association of Malaysia (PIAM) is advocating for a phased liberalisation of motor‑insurance pricing. By moving toward risk‑based premiums, insurers aim to reward safe drivers with lower rates while curbing cross‑subsidisation of higher‑risk policyholders. The reforms could also pave the way for more nuanced EV policies that reflect the true cost of modern vehicle repairs. For insurers, the challenge will be balancing profitability with competitive pricing, while consumers stand to benefit from greater transparency and potentially lower premiums if risk‑based models take hold.