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A residential area in Yong Peng, Johor state, Malaysia, is submerged by floodwaters on March 4, 2023. /AFP-Yonhap

A significant proportion of Malaysians remain reluctant to purchase insurance against natural disasters, despite being exposed to the risk of property damage from floods and other disasters. In particular, only 13% to 14% of vehicle owners have added flood coverage to their motor insurance policies, raising concerns that many could be left without compensation when disasters strike.

According to local media outlets The Sun and Free Malaysia Today (FMT) on Monday, an average of 27.6% of Malaysian households had flood insurance last year, while only 13% to 14% of vehicle owners had purchased additional flood coverage.

Among fire and property insurance policyholders, 28% to 33% had added coverage for flood damage. This partly reflects consumers' limited understanding of what their insurance policies actually cover.

Many vehicle owners assume that comprehensive motor insurance automatically covers flood damage. In reality, however, policyholders often need to purchase an additional rider to obtain coverage for natural disasters.

Given the scale of damage caused by natural disasters in Malaysia over the years, analysts say these insurance coverage gaps are increasing the financial burden on individuals.

According to Malaysia's Department of Statistics (DOSM), nationwide property losses caused by floods amounted to 933.4 million ringgit (approximately 310.1 billion won) in 2024 and 636.9 million ringgit (approximately 211.6 billion won) in 2025. These figures represented 0.05% and 0.03% of nominal gross domestic product (GDP), respectively.

Malaysia frequently experiences flooding during the northeast monsoon season, which runs from November to March of the following year, when seasonal shifts in wind direction bring heavy rainfall.

Experts say climate change is extending the period of natural disaster risks beyond the traditional monsoon season. Flash floods are becoming more frequent, while the country continues to experience more than 100 landslides and thousands of incidents involving fallen trees each year.

Chua Kim Soon, chief executive officer of the General Insurance Association of Malaysia (PIAM), attributed the low insurance take-up rate to a general lack of insurance awareness and complacency among people who believe disasters will not affect them personally.

"Malaysia's insurance penetration remains very low, not only by global standards but also compared with neighboring Singapore," he said. "With limited interest in and awareness of insurance, it is difficult to encourage people to purchase additional coverage against floods and other natural disasters, even ahead of the monsoon season."

Experts remain skeptical about making natural disaster coverage mandatory in all basic insurance policies. They argue that a blanket requirement could impose unnecessary costs on consumers and that individuals should instead be allowed to choose additional coverage based on their financial circumstances and needs.

                                                                                                            Hong Seong-a