The recent surge in torrential rain across various states in Malaysia has prompted the Persatuan Insurans Am Malaysia (PIAM) to emphasize the urgency for Malaysians to take immediate measures to safeguard their property and belongings, especially in light of the need for a swift recovery following flood incidents.
Floods, a recurrent natural disaster in Malaysia, particularly during the monsoon season, result in substantial annual damages. The Special Report on the Impact of Floods in Malaysia 2021 by the Department of Statistics Malaysia reported losses amounting to RM6.1 billion due to floods in late December 2021 and early January 2022. With the onset of the monsoon season, the risk of flooding is expected to escalate.
While awareness about flood coverage has increased, with comprehensive motor insurance take-up rates rising from 12% to 14% in the first half of 2023, there remains a crucial need to enhance awareness about flood risks and protection. This is especially important given the heightened threats posed by climate change and topographical alterations.
The uptake of fire insurance with flood coverage has seen a slight increase, reaching 33% in the first half of 2023, up from 31% in 2022.
PIAM highlights that all its members offer flood coverage extensions under comprehensive motor and fire insurance policies. These additional protections come with an extra premium and are subject to each insurer’s underwriting criteria.
Policyholders are strongly urged to carefully review their policies and seek guidance from intermediaries for precise information. Intermediaries play a crucial role in providing insights into coverage variations, terms, and conditions across different insurance providers, ensuring policyholders are well-informed to make decisions tailored to their specific needs.
The premium for flood extension coverage under a standard tariff policy for risks below RM10 million stands at 0.086%. For instance, a property insured for RM200,000 would incur an additional annual premium of approximately RM172 (about RM0.47 per day or RM14 per month), a relatively modest amount given the protection it offers against flood losses.
Homeowners are additionally advised to consider houseowner insurance, usually inclusive of flood coverage and other perils, and to add householder (home contents) coverage for comprehensive protection at an affordable cost.
A report by Malaysian Re highlights that Southeast Asia is experiencing more frequent and devastating rainfall, likely a consequence of climate change. In light of these developments, Malaysians are strongly advised to proactively protect their assets against floods, natural disasters, and fire. It is crucial for individuals to review their insurance policies to ensure they have adequate coverage that aligns with their unique needs and circumstances.
In a related development, AM Best has maintained a stable outlook for Malaysia’s non-life insurance sector, driven by anticipated strong premium growth and continued discipline in underwriting and pricing.
