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The insurance industry plays a critical role in the energy transition by identifying, mitigating, and transferring risks associated with emerging environmental challenges.

Insurers help businesses understand potential vulnerabilities related to climate change and provide financial mechanisms to manage those risks effectively. This includes underwriting policies that support investments in renewable energy and energy-efficient technologies, which are essential for sustainable growth and enhancing the resilience of the economy against climate-related disruptions.

Speaking today BusinessToday exclusively recently, Liberty General Insurance Berhad Chief Commercial Lines Officer Foo Yong Chiat saidrecent studies by the Small and Medium Enterprises Association of Malaysia (SAMENTA) revealed that less than 12 percent of SMEs surveyed indicated their readiness for ESG implementation.

“Although the National Industry ESG framework launched in October 2023 has offered businesses a transition period to adapt to the new guidelines for manufacturing companies, we’re hoping to see the same consideration for a transitional period be offered to other sectors as Malaysia continues on its route to pave the way for a greener economy.”

According to the United Nations Global Compact Network Malaysia and Brunei (UNGCMYB), it is paramount for SMEs to adopt ESG practices, noting that the lack of ESG information is often seen as a sign of business risk, which may negatively affect a company’s image and decrease its brand value.

Within the same report, the UNGCMYB also stated that non-compliance to these regulations may result in businesses facing increased difficulty in obtaining loans, given that ESG risks are classified as a substantial material risk.

Within the context of sustainability, commercial insurers aim to help companies better understand and manage their exposure to climate-related risks.

Awareness Grows

While the awareness of sustainability continues to grow, there is still limited understanding of climate-related risks by Malaysian companies, notably local SMEs (Small and Medium-sized Enterprises), which may be a challenge in meeting compliance requirements.

Additionally, integrating climate considerations into operations is a significant challenge, particularly for SMEs with limited resources. Understanding the full impact of climate change on business and implementing appropriate mitigation and adaptation strategies are crucial. This complexity can make it difficult for some SMEs to develop and implement effective climate resilience plans.

“However, at Liberty, we are committed to monitoring developments in climate risk management and enhancing our resilience strategies in alignment with global trends. We focus on integrating climate risk considerations throughout our governance, strategy, risk management, and reporting processes. Our efforts are aligned with broader initiatives that promote sustainable and orderly transitions within the industry, emphasising support for our clients in adapting to these changes efficiently and effectively,” Foo said.

With the integration of sustainability factors into business operations and investment decisions, this initiative will likely kickstart a roadmap to encourage the transition of companies towards climate-supporting activities by 2026, as mentioned by Bank Negara Malaysia.

As one of the leading general insurers in Malaysia and a global P&C, Liberty continues to focus on integrating sustainability into our business operations. We recently became a member of the United Nations Global Compact Network Malaysia and Brunei (UNGCMYB) as part of our commitment to sustainable practices.

Operational Resilience

Enhancing operational resilience will require Malaysian companies to put strong focus on ESG integration and advanced risk management.

Companies first need to set clear goals and performance indicators to ensure a focused approach towards sustainability, encompassing initiatives like energy efficiency, responsible sourcing, and ethical business practices.

The companies can then foster open dialogue with employees, customers, investors, and communities, facilitating a deeper understanding of stakeholder expectations and emerging ESG risks. Transparent communication about ESG efforts not only enhances trust, but also bolsters the company’s reputation and brand value.

Collaboration and partnerships with industry peers, government agencies, NGOs, and academia also play a pivotal role in this endeavour. By pooling resources, sharing best practices, and addressing shared challenges collectively, companies can amplify their impact and drive systemic change.

Liberty supports this initiative, especially guiding SMEs to incorporate sustainable practices into their operations, thereby not only safeguarding their business but also positioning them well for future challenges.

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Commercial insurance is essential in today’s complex world, providing crucial financial protection against physical and cyber risks. It not only offers a safety net against unforeseen events like cyberattacks but also equips businesses with the necessary resources and expertise to mitigate various risks.

Liberty General Insurance Berhad Chief Commercial Lines Officer Foo Yong Chiat told BusinessToday recently that beyond offering crucial financial protection against physical and cyber risks, commercial insurance actively identifies and manages emerging threats, such as environmental changes.

“This not only mitigates financial losses from incidents like floods,  but also enhances business resilience, especially for SMEs, through strategic advisory services. This comprehensive risk management ensures businesses are well-equipped to handle disruptions, maintaining continuity and operational stability, Foo said.

In regions with a higher uptake of insurance, there is often access to richer datasets on various risks, including those related to climate. This abundance of data enables insurers to better understand the specific risks facing a region or market, which, in turn, facilitates more accurate climate modelling and risk assessment.

Leveraging this wealth of data helps governments and organisations develop effective climate resilience plans, allocate resources efficiently, and implement targeted interventions to mitigate risks, he said.

“It not only enhances the resilience of businesses against physical and cyber risks but also contributes to more resilient and sustainable communities by fostering a deeper understanding of climate-related challenges and facilitating proactive risk management efforts.”

For instance, services like Liberty’s Legal Shield offer our policyholders the right legal advice to tackle challenging situations that can be rather stressful, costly, and will eventually leave the business at a disadvantage, especially financially.

Additionally, our ‘BizCare’ package offers a complete insurance package designed to safeguard most businesses against a range of potential risks. From fire and business interruption to liability and burglary, comprehensive protection can protect business assets and give customers peace of mind.

Advancements in the insurance sector in Malaysia

With regard to the advancements in the insurance sector in Malaysia, Foo said, “Over the past year, we’ve observed various trends and advancements that are likely to continue shaping the commercial insurance sector in Malaysia.”

Emerging trends in Malaysia’s commercial insurance sector for 2024 and beyond include a heightened focus on ESG integration and sustainable investing. Insurers are increasingly incorporating environmental and social factors into their operations and underwriting and investment strategies.

Additionally, technological advancements—particularly in artificial intelligence and data analytics—are expected to enhance risk management and claims processing, enabling more efficient handling of both traditional and emerging risks, such as cybercrime.

“At Liberty, we are committed to enhancing our products to meet the needs of our customers and emerging risks. As a result, the first-of-its-kind Video Appraisal technology was introduced by Liberty to enable the expedition of claims processes within just two to three working days, from up to seven days previously.

This digital solution has helped to accelerate the claims resolution process which leads to a quick release of payments for the claimants and instant gratification, especially when Malaysians were faced with the nationwide flood disasters.

While the adoption of technology and digital paved the way to make these advancements possible, our real drive to pioneer this effort is because we believe in helping people embrace today and confidently pursue tomorrow.

“We will continue to monitor the emerging risks to stay ahead of market changes and adapt our policies accordingly. We believe it’s essential for us to maintain flexibility and a proactive approach in addressing evolving risks within the property market.

Emerging Risks, Challenges, Or Trends of the commercial insurance landscape

As the market becomes more competitive and diverse, it’s imperative for Malaysians to stay informed and proactive in navigating these changes. Businesses face new risks and challenges, particularly from technological advancements and cyber threats.

In Malaysia, the phased liberalisation of the insurance industry presents both opportunities and challenges for individuals and businesses alike. It is prompting more tailored and flexible insurance solutions, crucial for effectively managing these emerging risks.

For SMEs, in particular, staying ahead of the curve involves recognising the importance of insurance as a tool for managing risks. While SMEs may lack the resources to handle these risks independently, they could work closely with their insurer provider to help invest in robust risk management strategies, utilising data analytics and predictive modelling, and collaborate closely with insurers to enhance their resilience and competitiveness.

By partnering with an insurer that understands these dynamics and offers innovative solutions tailored to their specific requirements, businesses can enhance their resilience and adaptability in an increasingly complex and dynamic business environment.

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As part of our efforts to continuously enhance the customer experience and service quality for all our partners and customers, we are pleased to announce that the Kuala Lumpur and Selangor branches have relocated to new locations on 20 May 2024.

The new location details are as below:

Kuala Lumpur

Address: Menara Liberty KL, No 1008 Ground Floor & Level 7, Jalan Sultan Ismail, 50350 Kuala Lumpur

Phone Number: 03-40483998 / 03 26932937 / 03 40483856

Selangor 

Address: Menara Liberty KL, No 1008 Level 7, Jalan Sultan Ismail, 50350 Kuala Lumpur

Phone Number: 03-4048 3998

We believe that these efforts will play a significant role in our aspiration to become the Leading General Insurer in Malaysia.

Thank you for your support.

As part of our efforts to continuously enhance the customer experience and service quality for all our partners and customers, we are pleased to announce that the Temerloh branch has relocated to a new location on 6 May 2024.

The new location details are as below:

Address: No.3, Jalan Dagang 1, Dynaton Bukit Angin,

28000 Temerloh Pahang

Phone Number: 09-296 0933

We believe that these efforts will play a significant role in our aspiration to become the Leading General Insurer in Malaysia.

Thank you for your support.