LPI Capital: We’ll go to independent tribunal if we have to

KUALA LUMPUR: LPI Capital Bhd, which is in the midst of submitting its representation to the Malaysia Competition Commission (MyCC) in relation to MyCC’s investigation on the General Insurance Association of Malaysia (PIAM) and its 22 members, has plans to go to an independent tribunal for appeal if the final decision by MyCC is not in its favour.
LPI CEO Tan Kok Guan said it is in the course of preparing evidence for insurance subsidiary Lonpac Insurance Bhd, as deadline for submission is early April. He said PIAM will submit its representation on behalf of the industry, but individually members will also submit their own. Insurer AIA Bhd has submitted its evidence to MyCC. 
MyCC has proposed a financial penalty of RM213.45 million on PIAM and its 22 members, including RM8.3 million on Lonpac for the alleged infringement of the Competition Act for fixing parts trade discounts and labour rates for repair workshops.
“We think it (RM8.3 million penalty) is not material (impact) but we still feel that we’ve not breached the Competition Act,” Tan told reporters after LPI’s AGM yesterday.
“Of course, we hope that they (MyCC) will change their decision but if they still maintain their opinion, we still have the option to appeal to an independent tribunal,” said Tan.
Bank Negara Malaysia (BNM) had said the arrangement between PIAM and the Federation of Automobile Workshop Owners’ Association of Malaysia (FAWOAM), which had led to alleged infringement of the Competition Act and subsequent penalty, 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.
“We feel that we’ve complied with BNM’s directive so we shouldn’t be fined for that. We definitely will appeal until the end,” Tan added.
Meawhile, LPI expects Lonpac to achieve over 5% growth in gross premium income this year, above industry growth, as it is beefing up its distribution channels, including increasing the recruitment of agents.
In 2016, the general insurance industry registered a mere 1.1% growth in gross premium income. Lonpac’s gross premium growth was 2.2% last year, reaching RM1.28 billion. Its gross premium income for its Malaysian operations grew 4.3% to RM1.2 billion last year.
“This year, (industry) growth may be below 5%. We hope we can grow more than the industry. Even 5% is a high target, but hopefully it’ll be better than 1.1% last year, which was quite flat,” said Tan.
He added that this year will be another challenging year with the liberalisation measures implemented by BNM.
“Effective July 1 this year, there will be a detariffication of the motor insurance tariffs and may increase the competition. Some underwriting margin may be compressed,” warned Tan.