PETALING JAYA: Allianz Malaysia Bhd (AMB) is expecting weak growth for the motor insurance segment this year, due to the impact of the nationwide lockdown and global chip shortage on the automotive industry.

       Chief executive officer Zakri Khir said vehicle sales for June are expected to be bleak as car showrooms and vehicle production facilities stay closed under an extended phase one of the National Recovery Plan.

       “We expect no growth this year. For the month of June itself, we’re anticipating zero sales, ” he told reporters during a virtual media roundtable discussion yesterday.

       “This is because of the lockdown. The automotive sector is also impacted by the chip shortage. The industry this year will be very weak, because there are not enough cars, which will mean not enough insurance, ” Zakri added.

       Some automotive analysts have already forecast zero car sales for June, as car companies were not allowed to operate and most government agencies either closed or worked with minimal staff during the month.

       The Covid-19 pandemic saw a surge in demand for personal electronic items such as cell phones and laptops, which eventually led to a shortage of chips worldwide as production could not keep up with demand.

       Some cars need more than 3, 000 chips per vehicle. Even if one of the chips is unavailable, the production of that vehicle cannot be completed.

       Meanwhile, in its 2020 annual report, AMB said motor insurance represents a significant segment of the general insurance industry, with Allianz General being one of the top motor insurers in the country.

       “The motor portfolio made up 66.4% or RM1.56bil of gross written premiums, while the remaining RM791.4mil from non-motor is made up of property, health, personal accident, liability, marine and others.”

       For 2020, Allianz General delivered a positive underwriting profit of RM235.6mil, an increase of 41.3% from RM166.6mil in 2019.

       “The combined ratio remained healthy at 88.4% as compared to 91% in 2019.

       This was a result of an improved claims ratio of 55.5% in 2020, against 59.1% in 2019, driven by savings in motor claims from less traffic during various phases of the lockdown.

       “Correspondingly, pre-tax profit increased by 19.2% to RM432.1mil from RM362.4mil the year before, ” it said.

       AMB saw its pre-tax profit dip by 26.7% to RM67.4mil in the first quarter ended March 31, 2021, as compared to RM91.9mil in the same period a year ago, mainly from changes in fair value in the life business segment.

       Revenue in the first quarter rose to RM1.61bil compared with RM1.48bil a year earlier.

       Total assets, meanwhile, grew 12.3% year-on-year to RM21.71bil as at end-March 2021, as compared to RM19.33bil last year.