As part of the New Motor Cover Framework (the Framework) in addressing the structural issues within the motor insurance sector, Bank Negara Malaysia is pleased to inform on the progress of enhancement measures to improve the claims settlement process and the implementation of gradual premium adjustments since its announcement on 11 March 2011.
In ensuring that the public has access to motor insurance at reasonable premiums, several immediate measures were introduced in May 2011. Among the measures undertaken include ensuring that the public would be able to obtain motor cover from the Malaysian Motor Insurance Pool from any general insurer or their branches as well as from any Pos Malaysia branch nationwide.
To ensure the successful implementation of the identified improvement measures under the Framework, a Joint Working Committee (JWC) was established in April 2011, comprising representatives from key Government ministries, the insurance and takaful industry, consumer and transport groups as well as the Malaysian Bar Council. Several enhancement measures already implemented have resulted in enhanced efficiency of the claims settlement process, with faster turnaround time for claims on personal injury, especially for cases that were settled via court mediation. Further measures to enhance efficiency include the referrals to the Compendium of Personal Injury Awards by judges in awarding compensation for personal injury as well as the enforcement of timelines for obtaining police and medical reports. Other measures for the implementation of further efficiency enhancements include the introduction of a motor insurance claims kit to expedite notification of an accident and claims as well as the establishment of a nationwide 24-hour call centre to provide immediate roadside assistance to accident victims in the first quarter of 2012.
As part of the Framework, the gradual revision in the Motor Tariff premium rates will be implemented effective from 16 January 2012. It will be the first to be undertaken after non-revision for more than 30 years. Over the duration, the levels of car ownership, accident rate and claims in Malaysia have risen significantly. In addition, hospitalization costs, medical expenses and costs of vehicle repairs and spare parts have also increased.
The premium adjustment is in small quantum and to be implemented gradually over a period of four years. The implication on the members of the public and businesses will be marginal. For example, in respect of Third Party cover, motorcycles of 110 cc will experience a premium increase of between RM1.00 - RM3.50 per year only (a maximum of 30 sen per month) over the next four years. For a private car of 1,400 cc, the premium adjustment will be between RM6.00 - RM34.00 per year (a maximum of RM2.80 per month) over the same period. For commercial vehicles such as outstation taxis and buses, the impact of the premium adjustment on the passengers would be minimal at less than 10 sen per passenger per trip.
The adjustment in the Motor Tariff premium rates will be reviewed periodically to ensure that the adjusted premium rates continue to be reflective of the claims experience. The Framework will pave the way for detariffing of the motor insurance premiums in 2016, in which? premium rates will be further differentiated in accordance to the risk profile of individual vehicles and fairer to vehicle owners as those with good claims experience would enjoy much better premium rates than those with higher risk profile.
To ensure that members of the public are aware and able to benefit from the Framework, particularly on the enhancements to the motor claims settlement process, Bank Negara Malaysia and the insurance industry will continue to provide information to the public on motor insurance issues through the consumer awareness and outreach programs that are currently in place.
Members of the public who have any queries relating to the Framework can contact Bank Negara Malaysia at TELELINK: 1-300-88-5465 or visit either the www.insuranceinfo.com.my or islamicfinanceinfo.com.my website. Enquiries can also be forwarded to either Persatuan Insurans Am Malaysia (PIAM) or individual insurers.