Malaysia: Motor insurance detariffication promotes innovation
Source: Asia Insurance Review | Jan 2018
More innovative motor insurance products with lower prices are expected to be rolled out following the liberalisation of the motor tariff which came into effect on 1 July 1 2017, said the General Insurance Association of Malaysia (PIAM).
PIAM Deputy Chairman Chua Seck Guan said that car owners can now, for example, purchase the smart key insurance, or opt for additional coverage such as flood damage insurance at a lower premium. These products were not available in the previous tariff regime.
Bank Negara, the central bank, introduced the first phase of the Liberalisation of the Motor and Fire Tariff on 1 July 2016, which allowed insurers and takaful operators to offer new motor products and add-on covers at market-based pricing. In the second phase, which took effect on 1 July this year, premium pricing for comprehensive, third party, fire and theft motor insurance coverage was liberalised.
Cheaper premium now
PIAM Chairman Antony Lee said the recent floods in Penang revealed that only 2-4% of car owners had insurance coverage against damage by floods as the related insurance premium was rather expensive.
PIAM CEO Mark Lim said: “For example, for a MYR100,000 (US$24,525) insurance coverage, the vehicle owner had to fork out MYR500 just for flood protection before detariffication. However, after 1 July 2017, the premium to cover damage by floods had decreased to MYR250. A