Application of Management Accounting in the Malaysian Insurance Industry

Sudhashini Nair, Teoh Wen Qin, Ilangovan Perumal


Management accounting within financial institutions facilitates strategies, governance, risk management, and financial performance. Financial institutions, such as insurance companies, rely on management accounting for strategic planning to develop policies and set rates that reflect associated risk. The Malaysian insurance sector is projected to reach RM70.3 billion by 2027; hence, it is imperative for the insurance industry to thrive and maintain its competitiveness. As insurance companies continue to grow, it is important for them to incorporate management accounting into their planning, control, and decision-making. The objective of this study was to examine the influence of variables such as competitive pressure, accountability, information technology, and management interest level on the application of management accounting in the Malaysian insurance industry. As there is still a lack of studies, especially in the Malaysian context, the aim of this research was to study the possible influence that these variables may have on the application of management accounting in Malaysia. Subsequently, this would enable policy makers to implement strategies that encourage the adoption of management accounting applications in the Malaysian insurance sector. The study used a deductive approach with questionnaires distributed to 200 employees in the middle and top-level management in the insurance sector. SPSS was used for data analysis. The results of the study revealed that accountability, information technology, and management interest level had significant positive relationships with the application of management accounting in the Malaysian insurance industry. The findings of this research revealed that the insurance sector places importance on the application of management accounting because of accountability, information technology, and management interest level. The Ministry of Finance, the National Bank of Malaysia (Bank Negara), and accounting bodies must continuously work toward ensuring that insurance companies use appropriate management accounting tools and techniques to effectively manage their resources and remain profitable. The implications of the research findings in this study are discussed.


Keywords: application of management accounting, competitive pressure, accountability, information technology, management interest level.

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