Kuala Lumpur, 09 October 2025 — As Malaysia accelerates its transition toward electric vehicles (EVs), general insurers are facing a dual reality: strong premium growth potential from motor lines, but escalating risk and pricing challenges in adapting to EV-specific exposures. The General Insurance Association of Malaysia (PIAM) recently confirmed that insurers are closely monitoring developments in the EV ecosystem to manage repair costs, battery risks, and workshop readiness.
At a briefing on the industry’s first half 2025 performance, PIAM CEO Chua Kim Soon said the market is still in an exploratory phase, calibrating how to underwrite EVs fairly and sustainably. “This is a new technology. We need enough data and experience so that we can design the right kind of products and price them accurately, in fairness to consumers,” he told reporters.
Growth Tailwinds from Motor Premiums
Despite the headwinds that EVs present, Malaysia’s motor insurance segment still holds promise. In 1H 2025, the general insurance industry achieved gross written premiums (GWP) of RM12.3 billion, a 4% year-on-year increase. Insurers also saw underwriting profits rise by 32%, fueled by disciplined pricing and growth in motor lines, which account for about 42.8% of total premium volume.
Analysts expect the motor insurance market to expand further. GlobalData projects that by 2030, Malaysia’s motor insurance GWP could reach RM14.7 billion, representing a compound annual growth rate (CAGR) of 6.0%
However, growth in premiums alone is not enough to offset structural pressure on claims and risk costs driven by EV adoption and evolving driver behaviors.
Emerging Challenges in Insuring EVs
Higher Repair Cost & Complexity
EVs bring fundamentally different maintenance profiles. Repairs often involve high-cost batteries, sophisticated electrical systems, and software diagnostics. Traditional repair shops may lack adequate equipment or training for EVs, driving up outsourcing or specialist repair costs.
Battery Risk & Safety
Battery systems carry unique risks, thermal runaway, fire hazards, and degradation. Insurers must estimate how to price for these long-term risks despite limited claims history and limited empirical data in the Malaysian context.
Workshop & Ecosystem Readiness
Insurers are assessing whether private garages and repair workshops are equipped to handle EV servicing safely. In many cases, workshop readiness, parts supply, and trained technicians are still nascent.
Data Scarcity
Because EVs remain a small proportion of Malaysia’s vehicle fleet, insurers lack sufficient historical loss, usage, and performance data, making pricing and reserving for EVs more uncertain.
Consumer Perception & Product Design
Designing insurance features that appeal to EV buyers (battery coverage, charging station liability, software hacking) complicates product design, especially when balancing affordability and risk. One local insurer, Liberty General Insurance, has already signalled its intention to expand EV-specific offerings beyond its Tesla coverage product.
Strategic Pathways for Insurers
To adapt, insurers may need to pursue several strategic levers:
- Tiered pricing and risk classification: Charging differentiated premiums based on EV model, battery size, usage patterns, and driver profile.
- Partnerships with repair networks: Collaborating with certified EV repair centers or OEMs to streamline cost and maintain quality.
- Telematics and usage data: Deploying sensors or connectivity to monitor EV usage, battery health, driving behavior, and enable usage-based insurance models.
- Provisions and reserving buffer: Holding stronger reserves to buffer against unexpected battery claims or new failure modes.
- Regulatory and standard alignment: Working with authorities (JPJ, SIRIM, safety agencies) to enforce EV safety and repair standards.
- Education and transparency: Communicating to consumers what coverage is included (battery, fire, charging station liability, software failure) and the tradeoffs of pricing.
What This Means for Malaysia & Investors
- Premium growth with caution: Insurers may benefit initially from rising volume and premium expansion, but margin compression risk is real if claims severity rises unchecked.
- Insurer differentiation: Firms that build EV-competency early, better pricing models, partnerships, data analytics, may capture market share and brand trust.
- Capital & risk management pressures: Adapting business models may require capital investment in systems, data, and technical capabilities.
- Insurtech innovation opportunities: The gap in EV risk products opens space for insurtech entrants offering modular, usage-based EV policies.
- Regulatory & consumer protection oversight: Regulators may scrutinize unfair pricing or coverage gaps, especially during the transition period.
