Thursday 28 Mar 2024
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KUALA LUMPUR (Oct 24): Despite the move by Bank Negara Malaysia (BNM) to further liberalise the motor insurance tariff, insurance operators cannot simply raise the premium pricing for motor insurance prices, and any price hike above 10% will require the approval of the central bank.

"BNM has taken several measures to ensure insurance providers do not simply hike prices. There must be a basis for any increase in premium rates," Second Finance Minister Datuk Seri Johari Abdul Ghani said in parliament today.

"And for any price hike of more than 10% [following the liberalisation], it still needs to be approved by BNM. But if they lower prices, then we give them the flexibility to do so," he added.

BNM had further liberalised the motor insurance tariff beginning July 1 this year, by introducing a flexible pricing for motor comprehensive and motor third-party fire and theft insurance products.

The first phase of motor and fire tariff liberalisation introduced on July 1, 2016 saw insurance and takaful companies given the flexibility to offer new motor products and add-on covers that were not defined under the then existing tariff.

"Actually, the [liberalisation of the motor insurance tariff] is beneficial for Malaysians. Back then, we could only choose between the comprehensive or third-party insurance. But with the liberalisation, we now have a lot of motor insurance products to choose from — consumers now have the choice of taking up fire and third-party insurance products, without the need for the comprehensive one," Johari said.

"Further, we have companies offering telematics systems or devices which drivers can place in their car and obtain driver behaviour scoring from, which will be assessed by insurance providers when setting a premium rate for the driver's vehicle," he added.

Still, he stressed that third-party motor insurance coverage is compulsory to be offered by every insurance companies as this product is affordable for those in the B40 (Below 40%) category.

BNM said the liberalisation of motor tariffs came with a slew of benefits, whereby the availability of new products with different features will enable consumers and businesses to obtain the coverage that best meets their insurance needs, and consumers may benefit from shopping around for the best deals from the competitive pricing offered by insurers and takaful operators.

 

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