Had trouble renewing your third party motor insurance? Premiums too much of a burden? Here’s a chance for your views to be heard. Bank Negara Malaysia is seeking public feedback on basic motor insurance coverage for third-party bodily injury and death. Our central bank recently placed ads in newspapers, urging readers to download a copy of the consultation paper on the proposed policy at www.bnm.gov.my. Here’s the invite:
Following the Government’s announcement in Budget 2010 on the need to provide adequate access to reasonably priced basic motor insurance coverage, Bank Negara Malaysia is currently working with the relevant authorities in formulating a scheme to provide basic third party bodily injury and death cover at an appropriate level of protection to the public.
Bank Negara Malaysia has undertaken consultations with consumer and transport associations, the Malaysian Bar Council as well as the insurance industry to obtain the first round of feedback on the guiding principles, objectives and proposed features under consideration. We would also like to seek similar feedback from members of the public.
A PDF file which has presentation slides and FAQs are available for download. Feedback can be submitted to BNM via email, post or fax. “Feedback received from all stakeholders will be taken into consideration towards further refining the proposals under consideration,” Bank Negara says.
The insurance industry claims to have lost RM1 billion since 2008 as premiums have not changed for the past 30 years, leading insurers to be very selective in providing TPBID coverage. Owners of old cars are now forced to take up the last resort Malaysian Motor Insurance Pool (very expensive!) or buy comprehensive cover – I chose the latter. The issue caught the attention of the Prime Minister, who last month directed BNM to take into consideration the people’s plight when proposing the new basic motor insurance coverage. Let’s hope a good compromise is reached!
Look after the jump for an embedded version of the PDF file.
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In my opinion the high premium for third party insurance initially is to encourage motorist to replace their old car with a new one. However, this a REAL scenario:
A man, before retiring bought a brand new car. at the age of 65 years old, the car is more than 15 years old. Retired with no additional income he is being slapped or punished with high insurance premium. Not only that, he will have to pay additional premium because of his age.
To make matter worst, not many insurance company are willing to sell the insurance (even from the so called panel from Pejabat Pos).
Now, where do you think this old man gonna go??!
suruh anak/cucu je la bawak kan kete.. :)
Dear Gov,
Want my comment? here it is…
Last time, when my mother using a wira sedan, and after have finished her payment for the car, decided to use 3rd party insurance, but then the car been stolen after 2 weeks when she just renewed the insurance…
I suspected that the incident happened due to renewal of that insurance. Somehow they know that this car just changed to 3rd party one…
that’s just your mother is at the wrong place at the wrong time.i had a client who bought a brand new Benz and using 3rd party insurance all the time n his car still with him after 15 years. no problem ..
Following the US model could be a start. Risk is based on type of car, usage, age & experience of driver.
Try paying insurance rates for a change in North America.
Then you’d probably not even mention that.
Unless the government has a good alternative in public transportation, doing what North America does with its insurance would be the death of the middle class.
1) expensive cars
2) expensive fuel (relatively due to our PP)
3) expensive road tax
4) expensive insurance…..?? die standing.
Do you know a young adult, say 22y with a CLEAN record driving something like a (as plain as can be) Toyota Corolla will be paying USD2000-3000/yr …for a car that costs USD20k new? PER CAR. If you have an at fault claim, you risk your insurance rates double next renewal.
Imagine how that would work for the same corolla being sold now at 120K ..??!!! (ok perhaps we got better injury liability there)
You can kiss bye bye to all the younger generation that depends on private cars to go to school or uni….or even young adults starting out at work. (anything below 25 is high risk,anything older than 70 is high risk)
And each household have what? 3 cars….Die standing again.
Its fair to say that all insurance companies are nothing short of legalized daylight robbery.
I’d always had 3rd party coverage for the longest time. I’ve not had a claim….what makes the insurance company suddenly deem me and my car “high risk” and not want to insure me on 3rd party?
For the government to only “ask” for our opinion is a little late don’t you think?
The whole system is already pretty much fuxked up.
I don’t be so worked up if there were viable alternatives…. (I used to bike, walk, take the bus to neighbourhood stores, work, even when I had 2 cars in my garage….)
” Its fair to say that all insurance companies are nothing short of legalized daylight robbery.” is there any proof or anything to support your statement?
just purchase a personal accident (PA) or Driver and Passenger PA (DPPA) if you do not have other business with that insurance company. they will be happy to insured you a 3rd party for your car.
its not that the insurance company don’t want to insure u on 3rd party. if you are in their shoes, do u love doing some Rugi punya business? example the total cost for cooking a plate of mee goreng is RM2.70, are you willing to sell that plate of mee goreng for RM1.00? if you can survive for at least 1 year selling it at RM1 per plate, come give me a call. I’ll give you a FOC 3rd party insurance for both your car.all on me.
that’s the situation now for insurance company. they are collecting RM1 Premium from you but they are paying out RM2.70. you not had a claim does not mean there is no claims from others.
it’s good for you to walk,cycle to work or to somewhere else n keep your cars at home. it’s more environment friendly and good for you health .
cheers mate
Biasalah. This gomen doesn’t admit to mistakes until the kaka has hit the fan and the system no longer can sustain the mistake.
I know if it’s revamped that some will suffer but only in the beginning. If their record’s clean then they’ll enjoy savings. As it is now, I don’t agree on having to pay high premiums for other people’s mistakes and fraudulent claims. I’ve never ever made any claims.
This could actually encourage new drivers to be more careful so they enjoy lower premiums later. And maybe, just maybe, if enough young grads are put off by high premiums, they might actually create demand for public transportation. It’s arguable but so is the chicken & egg story.
bank negara prays to the gods of ancient Egypt, just look at its symbol.
Z T = goddess in rein
LOL. Not related at all but funny :D
That symbol is “Kijang Emas”. It was based on the coins minted by the sultanates of Kelantan and Kerajaan Melayu Pattani (now in Thailand) in 17-18th Century. It has nothing to do with ancient Egyptians.
Third Party Insurance Coverage should be made available to anyone without any unwanted reasons and the cost to purchase it should be seen reasonable. The public also should not be forced to buy additional insurance for third party purchases. The government under 1Malaysia policy should consider the public interest first before making any policies that does not benefit the public at large.
they did’t force you to purchase additional stuff, it is just that they upsell a bit to make it for their loses. if you don’t like those additional purchases, their door is always open for you to walk out. no worries mate .
furthermore, those additional purchase are mostly PA insurance is also for your own good.
really?..try ask the Uniasia insurance. it is compulsory to buy PA for 3rd party ins, otherwise you’ll hav to go to puspakom..what da fkkkk!
This is just a ‘melepaskan batuk di tangga’ effort. BNM likely to favour insurance company this time. It is a cry after cry then only they make this feedback announcement. The Sub already highligted this a long time. I am worry the trend that when company make profit they own it, when they loss, they need the rakyat’s money. very very unfair.
Looks like the plan to a high income society will be driven by high cost living. I’m sure I’m not the first to think of this and I surely won’t be the last.
I believe that loading drivers with fault claims will also fuel some amount of corruption. Anyone who gets into a multi car accident will start to blame the next person as the one at fault – the one with the highest coffee pot will get off, while the guy who doesn’t pay for his coffee will get loaded. End of the day who makes money? Enhanced revenue stream for an already ‘rich’ sector.
That said, I think comprehensive insurance for all would be good. But the insurance companies must remove the clause to use replacement, 2nd hand or non-original parts on vehicles greater than 5 years old.
Dear Readers,
This proposal by BNM should not be taken lightly as it will affect not just drivers or buyers of cars but to every road users including passengers and pedestrians. My work is related to this industry and I have been around for some years now. I would just like to point out certain issues that may not be so much apparent to the general public which may affect all road users if BNM’s proposal is to be put forward and accepted.
Currently the law related to any claim for personal injuries and death is Road Transport Act 1987 (RTA1987). Basically, it requires that vehicles should have the coverage of at least Third Party coverage. When A met with an accident with B and it was B’s fault, A will have a claim against B under common law and under RTA1987, the insurers of B will have to pay out to A, either at an agreed sum (settlement) or via court’s judgement. Majority of these claims are done with the assistance of lawyers.
What BNM is proposing now is to set up an entity, TPBID NEWCO which one of its roles is to determine the payout of claims to the claimant. This entity will be governed by TPBID Board and Management.
One of the factors cited in support of this scheme is that it will save time of the claimant as under the current settings, claims will take 1-3 years. Let’s say A was seriously hurt in the earlier accident with B. Usually he’ll be hospitalised, ranges from a few weeks to a few months depending how serious the injuries were. There is a possibility that A’s condition may deteriorate with time and an early assessment of the claim will not be beneficial to him at all. I am foreseeing that TPBID will pay out to a claimant with a medical report. Sometimes a medical report will not fully give out a clear picture of how serious A’s injuries are and specialist doctor’s report will be necessary. A will not be paid the amount which in accord to the seriousness of his injuries.
Each motorist will pay a basic cover. Additional cover on top of basic protection will be optional. I expect the basic cover’s premium will be at least the same as the price we are currently pay, if not more. However, basic coverage only covers for up to RM2 million OVERALL. Each head of claim there will be a cap on it and it is not stated how much the caps are. Eg. If A claims RM1 mil for pain and suffering and RM1 mil for nursing care, and if the cap is RM500k each for pain and suffering, nursing care, loss of income and damage to vehicle respectively, that means A can only claim RM1 mil. Although BNM says that this proposed cap is sufficient to compensate vast majority of the public, how about the minority?
Let’s say A is the minority here and his claim is genuinely worth RM3 million. If B who knocked into A bought the additional coverage, then the insurance will have to pay. But what if B has not bought this coverage? A will have to sue B personally. If B is the son of some rich timber tycoon, then B may pay. But what if B is like majority of us an average wage earner trying to get by every month? A will not get the payment he deserves and B will be made a bankrupt.
Scenario A of the proposal wants to leave out the Courts in assessing the claim except for in exceptional cases. What are these exceptional cases? Can we trust the TPBID board which made up of insurers to determine the amount we can claim? They are there to represent the insurance companies’ interests only. We need the Courts to be the impartial and independent body to act fairly to both parties!
The insurance companies only want to make profit. By collecting the additional coverage premiums they are receiving more income and yet they want to pay less to deserving claimants. Dear readers, A in the example may be a person you know, a family member, a loved one or even ourselves.
Instead of this scheme, BNM should look into the practices of other countries like in UK where premium payable is determine by factors such as age, gender, the type of car driven, residence etc.
If you think there is some logic to my points here, please spread it around to your friends. We should object to this proposal.
Good piece of writting with very valid points!! did u send this to BNM as your feedback??
Good points. But do you trust the government to police the insurance companies?
The reason we are having this discussion in the first place is that they have failed.
Its one thing to say we should follow Britan or USA and use them as a model of insurance coverage….but then again, thats only looking at one side of the story if having insurance in a high earning society with relatively low cost.
Do you think we can afford any more insurance premiums?
The government should protect the rights of consumers, such as I, with clean driving record, 0 claims, yet denied 3rd party insurance on NO GROUNDS (other than they are not making money).
In the case of USA, it’s known that there is an immense level of bureaucracy in the insurance sector and having to pay all these paper pushers drove up the cost of insurance. Correct me if I’m wrong but I don’t think our system’s bureaucracy is as bad as the Americans.
Very well said my friend. What you said above are all true including the “practices of other countries like in UK where premium payable is determine by factors such as age, gender, the type of car driven, residence etc.”
My friend, just a reminder the motor tariff have not been revised for the past 30+ years. You are paying the same premium of what you are paying 30+ years ago (maybe you’re unborn yet). The claim cost has been increase drastically, e.g. the spare parts, the labours, the adjuster fees, the bodily injury reward, the commission, the management expenses and the list goes on.
If you boss is paying you the same salary for the past 30 years, will you survive ? The same goes to the insurance company. The motor premium that collected are not sufficient to cover all the claims cost. Insurance companies are making losses. For your info for every RM 1 collected by insurance company for motor premium, they need to pay RM 2.50. How to survive in this situation?
I’m just highlight the point & pain which suffered by insurance companies. Perhaps your says that to follow UK system should be implement. By then how many people are afford to pay ? It will just lead to more people to drive their vehicle without insurance.
Think twice & two sided.
Think for the people and also think for the insurer.
KeN, your entire basis for critisizing heeman is based on the inflation arguement. Here the Insurers show their true colours – its a business, & that business is about milking as much money from the rakyat as possible. Look, I’m not against free enterprise – just make your products more attractive, give fair value & then sell them. Don’t bellyache when your crap products can’t sell in the market, then try to twist the govt’s arm into making people buy your stuff!
Better yet, withdraw 3rd Party Insurance & make the rakyat buy Comprehensive! Very clever plan!
Let me ask you, with your exclusion clauses, what difference is there between one insurer to another? People buy insurance because its a pre-requisite for getting their cars on the road. Don’t justify withdrawing 3rd Party Insurance because the price allegedly hasn’t gone up in 30 + years – that kind of arguement is devoid of merit.
Like Kassim Awang said, 3rd party Insurance should be made available to anyone who wants it!
Dukenborg, insurance is business, yes. Bear in mind, is not that the insurer product are not attractive or their price didnt gone up in 30 years. The fact is that the Product are standardise by Bank Negara (BN) and the price also are NOT allowed to increase for the past 30 years.
Tell your boss you dont need any salary adjustment / increment for the next 30 years. You can eat grass my friend.
I agreed that 3rd party should be made available, but to an extend to charge a reasonable price and limit the liability.
For instance the current motor policy condition limit
Third Party Property Damage : Limit RM 3 Million
Third Party Bodily Injury : Unlimited
The average premium collected for 3rd party are merely RM 100-150 per car.
Any bodily injury this days could cost a minimum RM 500K+ and up to few MILLIONS to insurer
How many 3rd party that you need to cover up the claim cost. A simple math they need about 3000+ third party case, but they sure will meet some claims as well.
I understand your frustration, but I hope you understand the problem face by insurer as well.
I dispute the argument that insurance rates haven’t risen in 30 years. While I agree that the rate per cc hasn’t gone up, the price of cars have. At the same time, cheaper materials and labour costs from countries like China has driven spare part costs down. Overall there is potential for higher margins at the insurance companies, and I’m reasonably certain that these margins are realised.
good explanation ken :)
they r not withdrawing 3rd Party Insurance. just that they are making some changes to it to suit the market.
Very valid points. I don’t agree on having related parties decide on the level of compensation.
*Shed manly tears*
Bravo heeman. Bravo.
@KeN : Don’t have to be sympathetic with them. Look at AIG. Got billions of USD bailout by American taxpayer, what do they do with it? Give millions of bonus to their director.
Even here in Msia, insurance companies sure do make healthy profit to always advertise in the papers their platinum/diamond/gold/titanium/uranium/plutonium/cockynium/blablanium distributors.
brother..you just generalise insurance business..there are differences between motor insurance and life insurance/ investment-link insurance where the latter is the cash cow for insurance company.
Heeman. Maybe I misread your comment, but I went through it twice. Still this is the ‘reading between the lines’ that I got.
I suspect you are a lawyer (or related to law industry) and the primary reason for your comment is simply because you feel you are being LEFT OUT in the overall scheme. The NEWCO will settle most claim cases outside the court. Hence, you (and your industry) will not get involved and not get paid in the process.
The example of A and B which you give (deteriorating condition of A, specialist doctor assessment, 3 million claims), I believe is WITHIN the exception cases requiring court hearing. The objective to shorten the claim from 1 – 3 year is commendable. Court hearing is the main factor dragging this time period and it also mean additional money has to be forked out for the lawyers.
Yes, the law industry viewpoint should be taken into account. I won’t deny that. Just that, your objective seems to be a bit one-sided too (ie to your own benefit).
Well, whether Heeman is a lawyer or not, he has brought up serious issues for consideration.
One of which is why should the amount of compensation be determined by a NewCo which is funded by Insurers? Whose interest would they be protecting when they are funded by Insurers?
And assuming NewCo runs at a loss, would bail out be next?
Instead of setting up a NewCo, what the government can do is to relook into the existing premiums (and raise it if it is way too low) and perhaps set up special courts to deal with accident cases so that these cases can be dealt with speedily by an impartial judge.
Some lawyers (those who deal with accident cases) may lose out if BNM’s proposal goes through but in reality, the population in general risks losing out more.
I am indeed a lawyer but I work for several insurance companies. I voiced out my opinion not because my job will be affected but I feel that the insurance companies are trying to put this scheme to work without giving out all the facts. I can still survive without personal injury cases but a lot of decent drivers are going to pay higher and additional premiums just because there is an imbalance in the premium payable by certain category of vehicles and bad drivers.
You think that the deterioration of A’s condition will come within the exception cases? Give me something in black and white then I’ll accept it.
Sad to say there are some lawyers who are taking a lot of money in assisting the Plaintiff’s claim but majority of them are only taking their professional fees. The way I see it, lawyers are necessary evil in this sort of cases. Does A know whether RM15000 is a reasonable figure if he has suffered a fractured knee? Can he trust the Board to give him a fair figure? I am not speaking as a lawyer here but as a driver, road user and consumer. Insurance is answerable to their investors and all they care about is to maximise their profit. It is the ordinary law abiding drivers and road users who will suffer without the Court acting as the arbitrator and claim amount is severely limited.
> The insurance industry claims to have lost RM1 billion since 2008 as premiums have not changed for the past 30 years…
But then, they also make billions in profit what!? Where got lost billions? If lost billions, already tapau liao…
Let’s do some maths here…
RM 1 billion lost since 2008, now it’s 2010…so take that as 2 yrs
So, 1 year they claim to lost RM 500 million
What’s the # of accidents per year? Is it 100,000 accident claims? That’s something like 100,000 / 365 = 274 accident claims per day. Wow, really?!
So, let’s say 100,000 accidents…then 1 accident claim is RM 500 million / 100,000 = RM 5,000. That’s quite a bit of money claim per accident.
Even if the accident is 10,000 per year, then the claim is RM 50,000 per accident. Can almost get new car for every accident. :-o
I’m no expert in insurance industry. That’s my 2 cents opinion.
It includes personal injuries. Your car may not worth much but I believe your life does.
Then this should not be called a lost, but a cost of doing business.
aiyo brother, u said they lost RM1 billion and then the next sentence u said they lost Billions…. I thought u just said RM1 billion? and billions of profit? how did you know that?
Did you see or notice that there are many smaller insurance player is the market are no where to be seen now? they are being tapau already mar…. being tapau by other big player :P (tapau = merge) etc Pan Global recently merge with Tokio Marine.
brother..get your facts right..below are Malaysia road accidents statistic for year 2000-2006. Although it is not up to date but the numbers on the uptrend.
Year Population Vehicle Road Road Road
Registered Accidents Casualties Deaths
2000 23263600 10598804 250429 50200 6035
2001 23795300 11302545 265175 50473 5849
2002 24526500 12068144 279711 49552 5891
2003 25048300 12868934 298653 52741 6286
2004 25580000 13828889 326815 54091 6228
2005 26130000 14816407 328264 47012 6200
2006 26640000 15790732 341252 35425 6287
Go and figure 500mil/340K..roughly RM1.5K. Sound reasonable?
If you zoom to only motor insurance biz, insurance co. pay out like rm3 to rm1 collected in premium.
FYI motor ins premium has been stagnant for decades, even loading is controlled by BNM.
It is only natural, insurance co shy away from 3rd party ins. imagine this, you pay for fire insurance, medical insurance, PA insurance and end up the insurance co gotta use that premium to cover their motor biz.
now motor insurance underwriting is based on value of the car, third party not much underwriting involved. there is always a pricing to a RISK, when this is distorted, the market will collapsed, the pool of money collected is not sufficient to cover all the claims.
it doesn’t help when legal practitioners are waiting to “assist” those met accident file a lawsuit and claims against insurance co. how many percent actually goes to the victim? BAR council care to share? how many cases are actually settled through arbitration?
It is all basic insurance knowledge, insurance co is a administrator of public funds and they are entitled to earn their administration fees.
Do not forget that Risk Based Capital Structure is already in place, insurance co needs much more capital to sustain their operation.
Look at Kurnia the motor king, look what state are they in?
Buat tu salah.. buat ni salah… bayar nak skit.. demand tinggi.. hidup kena realistik… Ini bisnes ma… mau rugi xyah bisnes.. so kita kena la pilih betul2… keta aku semua 3rd party.. ok ja…
Many insurance agent here..better write your view to BNM la..I think BNM already made decision..Our feedback is just ‘gula-gula’ only..
I have an old car (year 1984).
I dont mind change from 3rd party to first party with 8k/10k minimum coverage,
but the problem is the NCD cannot transfer.
currently my NCD is 55%.. but when to renew to other insurance company.. no more 3rd party, must take 1st party and min 10k coverage..and cannot transfer NCD.. total around rm500… so i decide to continue with current insurance company + 3rd party.. rm200..
hi,
insurance should be this way:-
kalau sykt insuran cakap rugi
jadi gomen malaysia takeover.
gomen tubuh sykt gomen baru seperti sgai contoh
“insuran nasional berhad” khas untuk insuran kenderaan dahulu.
gomen take care lah dan sapu habis bisnes insuran kenderaan di malaysia.
rakyat pun senang nak renew insuran dan roadtax under one roof.
gomen dapat juga kontrol yang tak bayar saman, lesen gantung & sbgainya.
tariff insuran saya rasa spt berikut:
motosikal = high risk – perlu ambil personal eksiden insuran
kereta =medium risk – 1st party or 3rd party seperti biasa
4wd eg. pickup = high risk to 3rd party – perlu kekal 1st party yang tinggi sebab pihak yang kena dilanggar oleh 4wd selalu mati dahsyat
lori = 4wd
bas = 1st party + cover passenger
lagi pun sykt insuran tidak akan bayar 100% kalau ada eksiden.
beter give gomen untung= negara untung = rakyat untung
claim insuran juga isu, buat claim mesti senang,
cth kereta langgar kereta,
1) tak perlu bincang tepi jalan, buat laporan polis saja + photo & saksi jika ada – polis decide siapa salah & didapati salah perlu bayar saman/kompaun
2) hantar / tarik ke wokshop yang dilantik insuran nasional
3) siap repair ambik kereta – selesai tak perl bayar apa-apa, kalau ada rasuah lapor.
sekian terima kasih.
Bati
bab ni memang aku sokong 100%.kita cuba fikirkan yang berlaku banyak kemalangan di jalan raya kebanyakkannya kereta yang baru.buatan malaysia yang total lost and die. bukanya aku nak kutuk keta buatan negara sendiri tetapi itulah yang terjadi. diwajibkan keta yang kurang 20th harus mengambil insuranans 1st party dan lebih 20th boleh ambil 3rd party. ada juga sesetengahnya keta tak cukup umur 20 th pun ambil 3rd party insurance murah katanya. ini masaalahnya yang sebenar.kalau cadangan ini dilaksanakan yang untung pun kerajaan.1 keta cukai jalan ikut cc 2400cc rm600 lebih. so kerajaan boleh ambil alih 3rd insurance melalui MNI bersyarat kenderaan melebihi 20 th sahaja.