MALAYSIAN Reinsurance Bhd (Malaysian Re) revealed that the floods that occurred in December 2021 had resulted in economic losses of between RM5.3 billion and RM6.5 billion.

Malaysian Reinsurance Bhd in a statement said the amount was stated in the Malaysian Insurance Highlights (MIH) 2021, the third edition of the Thought Leadership issue launched on Tuesday to study the impact of the floods on the Malaysian economy and the insurance market.

"MIH 2021 examines the key challenges of uninsured flood risk in Malaysia, where only about 10 percent of the economic losses are covered.

"According to MIH 2021, Malaysian insurers bear about RM1.5 billion to RM2.0 billion (the US $ 360 million to the US $ 480 million) or 20 percent to 30 percent of economic losses when a high share of manufactured properties are affected in the Federal Territory. Kuala Lumpur and Selangor, "he said.

Malaysian Re President and Chief Executive Officer, Zainudin Ishak said, MIH 2021 told how livelihoods and properties across the country were severely affected by the catastrophe on an unprecedented scale.

"The cost of flood insurance is quite nominal. This coverage is available as an extension to a standard fire policy and costs about 0.086 percent of the sum insured.

"The risk pricing is considered high and is often only bought in areas prone to floods or following recent incidents," he said.

MIH 2021 emphasizes the need to address this protection gap as flood risk increases as flood protection demand is influenced by government support for losses suffered by the low-income segment.

"In the recent floods, the government-supported those affected by channeling financial contributions of RM1.4 billion," he said.

The third edition of the MIH also said that the floods that occurred in December last year affected the price of flood protection in the Malaysian insurance market.

Insurers are also expected to review their reinsurance structures to ensure they have adequate coverage as a result of a deeper understanding of flood risk in the country.

Zainudin said Malaysian Re was working with Bank Negara Malaysia (BNM) and the National Disaster Management Agency (NADMA) to develop a solution that would bring together able-bodied groups to insure the indigent.

"From an insurance point of view, there is a need to hold more in-depth discussions to find solutions to better protect against flood risk in Malaysia with the cooperation of the insurance sector, regulators (BNM), NADMA, and the government.

"Previously, the focus was on the development of protections that address the exposure of the low-income segment of the Malaysian population; the current solution aims to provide faster protection and cover all sections of society or policyholders," Zainudin said. - Bernama

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