Motorists will have to pay more for the motor insurance cover from January 1, 2012 onwards. For those who have been following the news, you would know that general insurers have been lamenting about an unsustainable motor insurance framework for the longest time.

Motor insurance tariffs have been stagnant for more than 30 years. Accident rates are up (why – have our driving skills become worse, or perhaps our roads?), and cars are becoming increasingly more complicated and expensive to fix.

Under the new motor cover framework, premiums will go up from the January 1, 2012 and will gradually be increased over a period of four years. From 2016, it seems the motor cover industry will detariff, which will allow general insurers to set whatever prices they want, opening up the possibility of competition to offer the best rates to car owners. We could end up seeing more premium insurance providers with quick and premium service alongside “no-frills” budget insurance providers, with a lot of hurdles during the claims process.

Here’s an example of the changes that will happen in 2012. For Third Party cover, motorcycles with 110cc engines will have their premiums increased by amounts of between RM1.00 to RM3.50 per year. For a private car with an engine size of 1,400cc, premiums will go up by between RM6 to RM34 a year. These are the only examples released by Bank Negara so far – we will report more info once it’s available.