PETALING JAYA: The General Insurance Association of Malaysia has called on Malaysians to have flood insurance to provide relief in case of damage to their property.
As persistent torrential rains continue to affect several states, its chairman Antony F.W. Lee said the people should take proactive measures to ensure a quicker post-flood recovery.
He said the flash floods that affected several states in late December 2021 and early January 2022 caused widespread damage to property and financial losses nationwide.
“In 2022, floods in Malaysia caused overall losses of RM622.4 million, which translated to 0.03% of the country’s nominal Gross Domestic Product (GDP).
“Similarly in 2021, the ‘1-in-100 year’ major flood incident incurred economic losses of RM6.1 billion, which is equivalent to 0.4% of the country’s nominal GDP.”
Lee said an increase in flooding is expected in the coming months with the monsoon season gaining momentum.
“The pattern of the monsoon has changed. Devastating rainfalls have become more frequent, and climate change is taking a toll on Malaysians.”
However, Lee said there has been a positive trend of insurance policyholders becoming more aware of the need for flood coverage following the increasing instances of floods.
“Optional flood coverage in motor and fire insurance policies has seen an increasing take-up rate of between 12% and 14% in the first half of 2023. Additionally, the flood option under fire insurance has seen a slight increase to 33% in the first half of 2023, compared with 31% in 2022.”
Lee said while there is more awareness of the need for flood coverage, there is still a need to educate the public about flood exposure and protection due to climate change.
“The flood risk has become much more severe in recent years due to changes in topography caused by climate change.”
Lee said all member companies offer an extension for flood coverage under comprehensive motor and fire policies.
“The association has 23 member companies which include Berjaya Sompo Insurance, AIA Malaysia and Great Eastern Malaysia.
“This enhanced coverage comes with an additional premium and is subject to the individual insurer’s underwriting discretion.”
He advised consumers to review their policies and consult their intermediaries for detailed information.
“Intermediaries are well-equipped to assist in clarifying the coverage and its terms and conditions, as these aspects may differ among insurers.
“This proactive approach ensures that policyholders are well-versed about the specifics of their coverage. Policyholders can make informed decisions based on individual needs and circumstances when purchasing a new policy or making adjustments to their current one.”
Lee said contrary to common perception, flood coverage is affordable.
“The rate for flood coverage under a standard tariff policy for risks below RM10 million is 0.086%. It is an affordable sum given the amount of protection against losses resulting from floods.
“A property with a sum insured of RM200,000 would only incur an additional premium of about RM172 per annum. This is equivalent to RM0.47 per day or RM14 per month.”
He also encourages homeowners to opt for houseowner insurance, and consider including householder cover.
“These policies typically protect against floods and various other perils through additional coverage.”
