Motor insurance premiums will be based on a risk list

27 Oct 2014 / 12:47 H.

    PETALING JAYA: Motor insurance premiums will be based on a diverse list of risk factors from 2016 when the industry is de-tariffed, says Bank Negara Malaysia (BNM).
    Various aspects – from the driver's profile to the vehicle make – which are not embedded in the current motor tariff, will be considered, it said in response to queries by theSun.
    Among the risk factors are geographical location, make and model of vehicle, use of vehicle, occupation, claims history, gender and age.
    "Hence, the premium rates vehicle owners will be paying (will) correlate with their level of risk which includes claims experience," said BNM.
    The de-tariffing move would also see those with good claims record enjoying much better premium rates than those with a higher-risk profile.
    BNM said it is working closely with motor insurance players to formulate a feasible de-tariffing roadmap that will see premium pricing that is more reflective of risks.
    "In this respect, BNM is committed to ensuring that the de-tariffing process is managed in an orderly manner," it said.
    "As motor insurance is a compulsory cover, it is important that the de-tariffication approach does not significantly impact the motoring public and disrupt access to cover."
    Asked if the de-tariffing process was made due to the increase in motor insurance claims, BNM said adjusting premiums alone to commensurate with claims is not sustainable in the long run.
    "It is also important at the same time for efforts to be channelled at inculcating safe driving habits among drivers and creating greater awareness on road safety," it said.
    "Strong collaboration between the insurance industry, transport industry and other road users as well as the relevant agencies is particularly important to pursue complementary and mutually beneficial initiatives to reduce accident rates, save lives and hence minimise insurance payouts, which will eventually gravitate to lower premium rates," BNM said.
    BNM had announced in 2011 that effective Jan 16, 2012, the motor tariff premium rates in the country were to be revised on a gradual basis in the run-up to the abolition of tariffs.
    The premium adjustments was to be in a small amount and implemented over a period of four years up to 2016, when premium rates would be left completely up to market forces.
    On another note, BNM said policyholders will be required to pay Goods and Services Tax on all general insurance products purchased, including motor insurance, effective April 1 next year.

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