As has been made public last year, the motor insurance industry in Malaysia is heading towards the eventual removal of tariffs, with full market liberalisation to come in 2019. The move will have a huge impact on things for everyone – find out how you will be affected in this article, done in partnership with AIG.
In the automotive world, it’s a major shift, because one won’t be paying for motor insurance on a fixed price basis as is the case now. Currently, motor insurance premiums for comprehensive coverage are determined by a regulated tariff, based on fixed factors such as the sum insured, vehicle model, age and engine capacity.
As such, consumers in Malaysia have been paying a fixed price for their motor insurance, no matter which company they buy that insurance from. Purely based on the set factors mentioned above, all insurance providers will offer the same price for your vehicle comprehensive insurance.
That will soon change, with the roll out of motor insurance liberalisation starting from July 1, 2017. With a liberalised market, fixed insurance premiums based on set tariffs and price lists will be a thing of the past in Malaysia.
Instead of relying purely on the overly simplistic set factors above, your own risk profile will also be taken into account in the new liberalised market. Essentially, you could pay less – or more – to insure your ride, depending on a number of new factors (detailed below).
This also means that theoretically, no two insurers will have identical pricing for a motor comprehensive policy. With a liberalised market, consumers will have the ability to shop around and compare motor insurance products with different prices and value added items.
Survey on paultan.org, in partnership with AIG
It’s going to eventually be a very open and highly competitive marketplace, and perhaps a little confusing at the start. In partnership with AIG, we ran a quick survey on paultan.org to find out how much you may know about motor insurance liberalisation.
We had over 4,400 respondents within a week – thanks again for that, very much appreciated – and the statistics are quite interesting: while only 42% of respondents are aware that motor insurance is currently a tariffed product in Malaysia, up to 83% think motor insurance liberalisation will have an impact on their next motor insurance renewal.
This is quite telling, really. While the exact details and parameters of the market liberalisation – whether at the starting stage or full-on detariffication when it comes – have not been made public just yet, motorists are pretty much aware that there is a big change coming, and that it will make a difference on how they choose insurance providers.
Why and how will it change your decision making?
Unsurprisingly, 89% of the survey respondents will choose the insurer that offers the most competitive pricing and value. What Malaysians deem as competitive pricing will be an interesting space to watch. Clearly, while price is a determining factor for most consumers, it is equally clear that research will be a key activity before a buy decision.
That in itself is a big change from the current system. Under a tariffed market, your insurance premium will be the same regardless of your preferred insurance provider, as explained above. For the same vehicle (identical sum insured), plus identical add-on products, you’ll pay the same amount wherever you go.
That won’t be the case once market liberalisation kicks in. Insurance providers will then have a more open market to play with – to offer more affordable packages, or to include additional product coverage to be more attractive than others. Motorists can then shop around to find the ideal provider, based on both price and product offerings.
Research is key, and good drivers will be rewarded
This leads nicely to the second most popular answer: 86% of respondents will research on what each insurer has to offer before making a decision. Something that was not really necessary before, this will now be more important to get exactly the plan that you want. One insurance provider may be more affordable, but others may offer better product coverage – the choice is ultimately yours.
Next, 69% said that they will choose the insurer that rewards them for their good driving. This will be more than the simple No-Claims Discount (NCD) system that is currently in effect. Insurers may offer more rewards for those with better driving records than others.
The liberalisation of motor insurance is targeted at improving safety on the road, incentivising good risk management and inculcate safer driving habits. This will reward good drivers with no history of claims or reckless driving – a good driving record improves your risk profile, so it makes sense for you to pay less.
Top factors for choosing insurance provider
As for the top factors that respondents would consider when purchasing motor insurance in a liberalised market, the top choice, with 89% choosing this, is again, competitive pricing. As mentioned above, proper research and good driving will get you the best prices.
Second, though, is guaranteed claims approval within three days for claims (with cost of repair below RM5,000). Speed is almost as important as pricing, it seems, and insurance providers with the best turn-around time in the approval of motor claims will be the preferred choice among motorists.
Third in the list is rewards and discounts for loyal customers. If you’ve used the same insurance provider for years and years, should you get loyalty discounts? Well, while it would not have been possible before, in a liberalised market, that will be entirely possible. Should a provider have such loyalty offers, that may even influence you to stick to the same company come the next renewal time.
Motor insurance purchase/renewal – now available across multiple platforms
Speaking of researching, a liberalised market should bring about a big shift in how motorists purchase their motor insurance policies. As expected, 41% of our survey respondents still rely on insurance agents for insurance premium renewals, while 25% visit insurance provider branches. A significant amount do it online: 18% through the insurer’s website, and just six percent through third-party websites.
With research being such a vital step in choosing the right insurance policy, it will be doubly important for providers to have an efficient customer service (be it a call centre or the front counter) as well as having all the necessary information readily available through various platforms (physical outlets, website or via agents).
Motor insurance purchase and/or renewal will become easier than ever, with multiple platforms available to the consumers: online, walk-in service and agents. Insurance providers with experienced agents will surely have an advantage here, in being able to explain and offer a customised insurance policy that is ideal for you. Ease and convenience is another important factor, of course, such as being able to do an instant renewal online, complete with road tax renewal and delivery.
In short – how this will affect you and how you can benefit from it
With insurance providers offering different pricing, products, offers and customisability, savvy motorists wanting to get the best deals and the ideal coverage package will have to shop around between insurance providers, before choosing their preferred company. As always, the end-user will benefit the most from an open and highly competitive marketplace.
Motor insurance prices will no longer be fixed – other than the sum insured, engine capacity and the age of vehicle, premiums will soon be driven by other factors, including your own driving behaviour and record, the safety and security features in the vehicle and even where it is parked (avoid areas with higher incidents of theft).
In essence, you’ll have a more direct control over your motor insurance premium – lower your risk profile and you’ll pay less, and you can purchase insurance policies that suit your lifestyle and risk exposures better (with new and differentiated products tailored to your needs). Put simply, you’ll have more control over what you pay for.
On the whole, you can expect insurance providers to offer more innovative products, smoother and more efficient services and fairer (taking into account broader risk factors and driving experience), more competitive pricing with the liberalisation of the motor insurance market.
So dear readers, do let us know your thoughts and wishes for the upcoming liberalised motor insurance market in Malaysia. This article was done in partnership with AIG.
Langkah tepat NCD.. Meanwhile industri minyak maseh kartel.
Yes it rewards careful drivers. But will it be like the UK where insurance rates and very very high for young drivers especially males?
Young male drivers most risky. Motorcyclists especially.
Nope, young female drivers and kiasu mothers are riskier.
agreed female drivers in Malaysia are dangerous, that’s fact and we saw it everyday on the road ans it’s make me wonder how can JPJ issued them the license when ot takes four time to make a U turn
Just make it easy, be like foreign overlords where insurans price is more expensive than car. Then pipu will be more careful driving. And ban all insurans repair by 3rd party panels, must be from brandholder own workshops. Just so that usual overcharging for repairs, like in 1st worlds, will go to the brand instead of panel workshop owners.
There will always be both pros n cons.we have to just wait and see.
The question we should ask is ” Where can the consumer address his concerns if he kena whacked left,right,centre if these insurers stereotype drivers according to age,sex,occupations?
Does it mean those warga emas( even with clean record) will have to pay higher premiums?
The current system is more predictable n consumers
roughly knows how much to pay,albeit with a little loading for vehicles above 10 years.
What if u decide to buy a certain car,n plan to pay rm1200 for premiums n then suddenly kena whacked with rm1900 premium? Its a free for all…
In fact associate company,AIA already whacked policy holders with 20-25percent premium increase for this year alone,due to so called HIGHER CLAIMS RATIO. WE BUTA BUTA ,have to pay!!!
In fact,we should MOGOK,N deter these insurance giants from bullying us.
Did Etika,AIG,Prudential,Great EASTERN ,Tokio Marine make losses like Protong?
REMEMBER,what goes up never comes down(defying the law of gravity).
I cannot agree more on this. But there still a lot of Malaysian doesn’t aware, still sleeping in their daily working routine.
This policy will only benefit insurance companies (insurers) in long run. Yes, I mean ONLY benefit insurance companies, but not consumers.
For sure, insurers will not cut down their revenue, means, we better stop dreaming of cheaper premium after this policy. On the other hand, this policy give insurers the free hands to package their plan, and to have more reason to increase the insurance cost in the future.
There are both pros and cons, but in Malaysia when the people face big corporations it is often cons compare to pros. I think what will happen is our current rate will be the rate for those they deemed careful and low risk, while those they deemed to be risky will be forking out a lot more. When you go to company A and you dislike their rate then you go to company B and C and then you found out that their rate is LPPL all around the same, consumer fork out more money, companies earn more money.
Why do I get the feeling that liberalisation is another word for more expensive?
Why? Do u have a bad road record?
serupa CCRIS, good record bolih pinjam beli Banglo, kilang & kreta Conti.
No, after driving for 14 years in KL, I’ve been crashed into 4 times and never crashed into anyone.
Thats a lot. I live in KL and driven for 20 years yet only been knocked 2.
Oh and based on that, why need to worry?
If crash profile is clean, then u only need pay minimum based on new polisi.
81% male, 19% female. And they wonder why male claim more than female?
Fact is majority of cars out there owned by men. Plenty of cases where women lied in the police report, as they’re driving their dad’s, husband’s, brother’s etc car. Think of the women drivers driving on wrong side of the road, the Gen2 OKU girl, and BMW that hit a Myvi who claimed she came back from overseas, dunno here is left hand drive country. Were they driving their own cars? Had they not gone viral, will they claim they drove, or the owner drove so that can simplify claim process?
So why use gender to discriminate men? Bad drivers are bad drivers, men or women.
Ehh .. ayo. Brain dead seeing this. Men are worse drivers dude. Women drive slower and more careful, in general. ‘Slow/according to speed limit’ = ‘Bad’ according to men. The only bad women drivers are those who try and behave like boy racers. The guys are the ones beating red lights and not using turn signals and flashing behind everyone. You highlight 2 viral cases that became viral cos the women drove. How about the 5 massive accidents with whole families dying every week?? Mostly its the dad’s driving!
Male and female sama only… its those arrogant aunties driving big MPV’s to fetch ONE kid from school.. they are the ones who cause all the bad stuff..
in the word of Jeremy Clarkson: Speed never killed anyone, suddenly becoming stationary.. that’s what gets you..
Jeremy Clarkson is an idiot and a racist, speed does and has killed.
Women drivers are very reckless on the roads nowadays, especially young ladies. They cut in and out of the lane without caring for safety of other road users. When one needs to change land with proper turn signal, they will close in and make sure one cannot come in.
Men, in general are more polite and will give way to others who needs to change lane.
I agree that women driver tend to be more reckless than men. I’ve seen most of them especially the young ones driving while on the phone or texting, not giving signal while changing lane or even turning into junction, coming out from junction without looking, drive too slow on middle lane etc
Deluded. Selective eyesight. Or perhaps afraid to complain about ah bengs but will easily target Ah lians.
From a man.
men in Malaysia are serious sexists, look at all the likes for pro-men and anti-female comments. Apparently discrimination only hurts when you are the ones being discriminated against. When you go on percentages, meaning it does not matter the number of female drivers (although only slightly skewed), male drivers are the biggest cause of serious and fatal accidents, drunk driving and speeding. Not just in Malaysia, worldwide. You can’t pluck two or three cases from sensational headlines and use that as proof. This is purely stupid and does not prove that women are bad drivers. We are more nervous perhaps but years of being prepped as the weaker sex might do that to a person, no? Please stop sexism in Malaysia.
In Malaysia, whatever changes is made, you will see that the price will increase. No way price in going to reduce in Malaysia
Cuz in MY we never cukur when go down, so why do it?
Damn right!! Every change is an excuse to raise prices and reap profits..
house address will affect the rating as well, in the uk, gated and garaged car will pay less… and there is always a cheaper insurer like asda
I can already see those hardest hit would be old car drivers , and older aged drivers. Age is not a problem, i know many middle aged people having senior positions in corporates but drive like cuckoo.
Actually it will be the other way around. Younger drivers are always penalised more because they are deemed more dangerous (it’s a true statistic, in western countries at least).
As the insurance markets open up further, eventually young drivers in expensive/sporty cars will become insurable.. or ridiculously expensive. (Again look at the western market)
The reason i use western markets as a comparison is because that’s the model the insurance companies are trying to emulate
Thats the thing. Deswai i said dun ape them western overlords too much w/o taking everything into consideration. Them bashers just wanna cry & rant & complain but never listens.
actually in western countries there are debates going on regarding the legibility of motor insurance, charging very high premiums but low payouts leading to constant writeoffs
Say goodbye to those dreams of 23-24 driving a GTI or R model or conti cars. They are going to pay so much premium it will scare any parent off
No problem. They will say its due to business sejak kecil & inheritance.
Say what you like. In business, the price will likely mostly cost more. So do not for a moment think of benefits to consumers. Corporations always win.
Definitely the premiums will be jacked up and end up like a cartel. Because vehicle insurance is compulsory. They will end up with arcane packagings like the health and medical insurance that you really need to study the fine prints to figure out what and how much are actually covered.
the rates will firm up irrespective of your risk profile. business sense dictates
Is it true if a motor bike knocks a car and is at fault as comment by police and the car is not entitle to claim the motor bike insurance for repairs?
Usually either liberalisation or any bombastic word…the insuring company will kaya…do you think they will cut the price…big no…
We’ve not seen any real or solid info on the actual liberalisation. There’s a lot of talk and speculation. But none have actually published anything on how it works.
I’ve a Beemer 5 series, 08, very well kept, very good condition and comes with almost all the safety features you can think about. 2.5 litre engine. Never claimed (own damage claim/1st party AND never been involved in accidents) not even 3rd party claim against others. Have excellent driving record, haven’t had a speeding ticket in years.
So, what are the benefits that I’d be entitled to? I suspect, they’d add in car age, and say it’s at risk of accident due to bad maintenance, etc. And incur loading. Even now, thrs a 15% loading due to car age.
Anyway, NO ONE has been able to tell us exactly how this “liberalising” works, just speculations.
Paul Tan, your article is too long and wordy and at the end of the day, lacks clarity and added doubts (more caveats). The survey and statistics (thanks for conducting the survey), benefits the Insurance companies, not so much consumers. At the end of the day, how Ahmad decides on which insurance to retain or change, have no bearing on how Ah Chong does.
Hope you can write another article on HOW it impacts us as car owners, with actual facts, WHEN it’s made available.
Is there any difference in term of the price, when I renew the car insurance through agent or pay online by myself