As it gets closer to July 1, when the liberalisation of motor insurance tariffs in Malaysia kicks off, the General Insurance Association of Malaysia (PIAM) has again briefed consumers that many factors will come into play in determining premiums and that pricing is set to differ between insurers. It also said that those with poor driving records are set to look forward to higher premiums.
Speaking to The Sun, corporate communications manager Kuan Shook Quan said that as outlined by Bank Negara Malaysia (BNM), pricing will be determined by individual insurers and Takaful operators based on a risk-based assessment system.
As such, how much one pays for insurance will no longer be determined by fixed price lists, but by his or her risk profile. This means that theoretically, no two insurers will have identical pricing for a motor comprehensive policy.
Kuan said premiums will thus be charged based on the risk profile of the insured, in addition to the present model, age and cubic capacity of the insured vehicle. Risk factors will include driving habits, age of the driver, claims history, usage and safety features of the vehicle.
As mentioned previously, premiums may be driven by other factors. These could be safety and security features in the vehicle, duration that the vehicle is on the road geographical location (areas with higher incidents of theft) and traffic offences on record.
“There is no fixed system of calculation, but several standard risk factors will be considered by insurance companies. Driving behaviour, experience and claims records are expected to be factors for consideration in risk profiling to determine the premium,” she told the publication.
Kuan said this new policy should translate to lower premiums for lower risk drivers with good records on the road, while repeat traffic offenders will naturally have to pay more. However, this can be moderated by risk reduction factors undertaken by the policyholders.
She added that different insurers will have different ways of defining the risk profile group, and as such the price of a motor policy will differ from one insurer to another. “They should shop around and get the best insurance coverage that meets their needs and at a price best suited to them. However, consumers are cautioned that a lower price does not mean a better product. Proper assessment and due diligence must be done,” she said.
More on the subject, here:
Motor insurance liberalisation: how will it affect you?
Liberalisation of comprehensive motor insurance – Bank Negara expects no massive shift in pricing
Tariffs for comprehensive motor insurance to be lifted in July, full liberalisation in 2019 – PIAM
