Thursday 28 Mar 2024
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KUALA LUMPUR (March 1): Bank Negara Malaysia (BNM) said the proposed decision by the Malaysia Competition Commission (MyCC) against the General Insurance  Association of Malaysia (PIAM) and its 22 members for allegedly being parties to an anti-competitive agreement, will severely impact consumer interest.
 
In a statement today, BNM called the proposed decision by MyCC, “most unfortunate”.
 
“Public benefits are served by the arrangement that was mutually agreed between PIAM and the Federation of Automobile Workshop Owners’ Association of Malaysia (FAWOAM),” said the central bank.
 
Yesterday, MyCC proposed to impose various remedies, including financial penalties, against the 22 general insurers with regards to trade discount rates for parts of certain vehicle makes and labour hourly rates for workshops under the PIAM Approved Repairers Scheme (PARS), which MyCC claims is anti-competitive.
 
The arrangement was put in place in response to a clear directive from BNM to the general insurers in 2011, to address disputes between workshops and general insurance companies over insurance claims payments for motor repairs.
 
Such disputes had given rise to protracted delays in repairs and had caused significant inconvenience to consumers, the central bank said.
 
“Complaints were also received by the bank on unsatisfactory and high costs of repairs.
 
“The bank had received more than 500 complaints of this nature in 2011 alone, prior to the arrangement. Such complaints have now been reduced by 50%,” said BNM.
 
The central bank said the arrangement was necessary to reflect reasonable costs of repairs in an environment whereby motor insurance premiums are regulated by a tariff.
 
“Inflated claims, if not effectively controlled, would have necessitated significant adjustments to the tariff premiums affecting all consumers, or risked general insurance companies withdrawing altogether from the motor insurance market.
 
“This occurred in 2012 in relation to motor third party bodily injury claims, when more than one million motor vehicles were referred to the motor insurance pool for declined risks, due to difficulties faced by consumers to secure motor insurance at the prevailing tariff rates.
 
“The bank subsequently sought and obtained the government's approval to implement staggered with limited incremental revisions to the tariff. The tariff still remains in place today,” said BNM.
 
Measures are currently being taken by BNM to implement broad reforms in the motor insurance market, which includes the gradual liberalisation of the motor insurance tariffs.
 
This aims to promote a more competitive motor insurance market, while ensuring affordable motor insurance premiums in the long term .
 
“Without appropriate arrangements to control inflated and fraudulent claims which are being addressed as part of the reforms, these objectives will be severely undermined,” said BNM.
 
The central bank firmly believes public interests are best served by continued progress on the reforms in the motor insurance market.
 
“Any decisions to review the arrangement independently of these reforms without taking into account consumers’ interest, would prevent the public from enjoying timely settlement of motor insurance claims at reasonable costs and have confidence in the quality of repairs works,” said BNM.
 
The central bank will continue to pursue a resolution of this matter in the best interests of the general public.

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