KUALA LUMPUR: Insurance stocks on Bursa Malaysia barely stirred on Friday, as investors appeared unfazed by the government’s proposed base medical and health insurance and takaful (MHIT) plan announced a day earlier.
Share prices of eight insurers on the Main Market were largely flat to slightly lower, signalling that the market views the policy initiative as manageable rather than disruptive to near-term earnings.
Tradeview Capital fund manager Neoh Jia Man said the muted market reaction reflects the limited direct earnings impact on listed insurers.
“Most insurers on Bursa Malaysia do not have heavy reliance on medical and health insurance. Their earnings exposure is skewed more towards general insurance and other lines of business,” he told Business Times.
Neoh said the policy does not introduce new competition into the market, but instead requires existing insurers and takaful operators to offer a standardised base product.
As a result, investors currently perceive the impact on industry dynamics and profitability to be marginal, which he said explains the lack of excitement.
“Such a cautious response is typical for policy-related developments where near-term financial implications are unclear or limited,” he added.
LPI Capital Bhd, Bursa’s largest insurer by market capitalisation, slipped 10 sen or 0.65 per cent to close at RM15.30 after opening unchanged at RM15.40. Trading was thin, with just 44,500 shares changing hands, valuing the firm at RM6.07 billion.
LPI, which is 44.15 per cent owned by Public Bank Bhd, operates primarily through Lonpac Insurance Bhd, underwriting a broad range of general insurance products across personal and commercial lines.
Allianz Malaysia Bhd, meanwhile, showed mild resilience. The stock opened slightly lower at RM22.62 before recovering to end four sen, or 0.18 per cent, higher at RM22.70, with 276,100 shares traded.
At the current price, the insurer is valued at RM4.16 billion. The firm is majority owned by Germany’s Allianz SE, while the Employees Provident Fund (EPF) is also a substantial shareholder with a 6.99 per cent stake.
Syarikat Takaful Malaysia Keluarga Bhd, the only Syariah-compliant insurer in the group, closed flat at RM3.39, giving it a market capitalisation of RM2.93 billion on turnover of 89,210 shares.
The company is backed by several major institutional investors, led by Lembaga Tabung Haji with a 30.8 per cent stake, alongside the Employees Provident Fund, Permodalan Nasional Bhd (PNB) and Kumpulan Wang Persaraan (Diperbadankan).
MNRB Holdings Bhd, the fourth-largest insurance stock on the exchange, declined four sen or 1.59 per cent to RM2.47, with 65,440 shares traded. The PNB-controlled company has a market capitalisation of RM1.91 billion.
Among smaller insurers, Manulife Holdings Bhd and Tune Protect Group Bhd rose 1.8 per cent and 3.08 per cent respectively. Pacific & Orient Bhd was flat at 57 sen, while MAA Group Bhd slipped 2.94 per cent to 16.5 sen.
On profitability, Neoh said the base MHIT plan’s relatively low premiums are unlikely to significantly pressure insurers’ margins in the near term.
“Given the relatively low annual limits and basic coverage features, the base MHIT plan is targeted at the roughly 78 per cent of the population that currently does not have health insurance coverage.
“Existing customers are unlikely to downgrade from their current plans, which typically offer much broader coverage and higher limits, so the risk of cannibalisation is low,” he said.
Looking further ahead, Neoh said the introduction of a standardised product could gradually increase competitive pressure, though structural safeguards should help contain risks.
He said uniform benefits make it easier for consumers to compare premiums across providers, potentially exerting some pressure on pricing power over time.
“However, features such as mandatory deductibles, co-payments for non-panel hospital treatments and the use of DRG-based payment mechanisms should help mitigate moral hazard and contain medical cost inflation.”
The muted reaction in Bursa’s insurance stocks came after Thursday’s announcement of the base MHIT plan, a standardised medical insurance product aimed at improving affordability for basic hospital coverage.
Bank Negara Malaysia governor Datuk Seri Abdul Rasheed Ghaffour said participation in the plan will be voluntary for insurers and takaful operators, although most are expected to offer the base product.
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