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A Matter of Risk: Insurance in Malaysia, 1826–1990 by Lee Kam Hing (review)
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This book is a monumental and magnificent piece of research and scholarship. It will surely stand forever as the authoritative reference on all aspects of insurance in Malaysia and Singapore in the period covered.

In the Introduction, the author emphasises that the history of the insurance industry can be approached as narrow business history or as part of broader social, economic and political developments. The author says that it has not been easy to integrate the two approaches within a chronological framework. Indeed, such is a very difficult task. Nevertheless, he has set himself that task and succeeds in it admirably. The detailed development of the insurance industry is placed very carefully into the development history of the Straits Settlements, Malaya, Singapore and Malaysia.

The book presents the reader with a formidable challenge. The text is 517 pages long; there are 1436 footnotes, 95 tables, 19 pages of appendices and a substantial bibliography of 14 pages. This is not a book for the faint-hearted or idle reader. However, the extremely detailed text is relieved, and the narrative clarified, by appropriate sub-headings within each long chapter. It is impossible to review all the substance of the insurance industry over nearly two hundred years, but several aspects and issues stand out.

Although the title uses Malaysia, the greater part of the book is about Penang and Singapore, both separately and jointly as components of British Malaya. Not until the last chapters is Malaysia identified and then Singapore virtually drops out as the story moves to Malaysia post-1965. Correspondingly, oversight of the insurance industry moves from voluntary private associations based first in London, then in Singapore, and finally to regulatory oversight by the Malaysian government in Kuala Lumpur. In all this, it needs to be remembered that from the mid-nineteenth to the mid-twentieth century Singapore was of paramount importance in what was a single economy.

The author’s lengthy account of the early history of the Straits Settlements rightly restores Penang to its dominant position in the history of that period. It is far from fully recognized in the received literature that the European merchant firms, or agency houses, in Penang were numerous and influential throughout the nineteenth century. Penang was an important entrepot; its merchants traded with Sumatra, Thailand and Burma, as well as the Malay states, and acted for the shipping lines which serviced those areas, India and China. The development of insurance agencies was linked to merchant houses and trade patterns, first through Penang. Some twenty European merchant houses held insurance agencies in Penang alone as late as 1920 and there were even more in Singapore by then. As the major Singapore merchant firms grew and prospered, they gradually squeezed the smaller Penang firms out of insurance; by 1903, 135 insurance companies were represented in Singapore and 40 in Penang. Agency houses represented mainly British and Dominion insurers. Through this connection, the British insurers came to underwrite risks of the rubber estates and tin mines which the agency houses serviced. No agency house took on many insurers; in 1915 for example, of the leading merchant firms Guthries held 7 insurance agencies, Boustead 10, Paterson Simons 4 and Barlow 3; both the agency houses and the insurance companies were wary of the conflictual problems and administrative burdens which could arise if a merchant firm took on agency for too many insurers.

The merchant firms in Penang and Singapore were often associated with Chinese traders. As well as links with the European merchant firms, the Chinese merchants had their own networks throughout Southeast Asia and Hong Kong and China. Their involvement in transnational trade and shipping led naturally to insurance of their activities and to some extent they, too, undertook insurance business. In 1890, the Chinese were said to have at least two-thirds of the tonnage of Penang’s trade. By the early twentieth century, Chinese banks had emerged in the Straits Settlements and were closely associated with Chinese insurance companies.

The importance of insurance to the Straits economy was highlighted during World Wars I & II, when the economy was gravely threatened by war damage and the loss of export income; insurers pleaded for government support...

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