Motor comprehensive insurance has moved into the second month of its phased liberalisation, and according to Bank Negara Malaysia (BNM), some early trends have emerged in the first month since the switch began on July 1.
Full detariffication will only take place in 2019, but the short of it is that vehicle insurance premiums are now no longer calculated on a fixed rate basis, but on a risk-based assessment system. A number of factors will determine how insurers and Takaful operators price their premiums, and pricing is set to differ between insurers.
This means that theoretically, no two insurers will have identical pricing for a motor comprehensive policy, and consumers will have to shop around for competitive pricing rates and coverage that best meets their insurance needs.
The central bank has revealed some observations of some things that have come about in the first month of detariffication. Based on pricing models of 11 out of 26 insurers sampled as at end July 2017, it said that premium increases and decreases within a range of +/-10% were observed across all risk pools.
This suggests insurers are appropriately differentiating between lower and higher risks consistent with more equitable pricing. It added that a reasonable dispersion of premium adjustments that were less than +10% was observed, suggestive of more refined pricing models by some insurers.
Meanwhile, downward adjustments in premiums were more prevalent for newer cars compared to older cars, but no significant differences were observed across vehicle makes and models, which may
indicate a more cautious approach taken by insurers before fully reflecting risk factors in price adjustments.
It added that in the initial phase of liberalisation, this is likely to tamper the effects of premium adjustments across risk groups, though an exception was observed for high theft-prone vehicles, which are likely to attract higher premiums.
The central bank also noted that premiums generally decline with age, reflecting higher risks associated with younger and less experienced drivers, in particular below the age of 25 years. It however added that some policyholders within the age band of 40 and 50 years old might experience marginally higher premiums, which is partly attributed to the use of their vehicles by young adult children of driving age.
Interestingly, in the first month of liberalisation, higher premiums were observed for vehicles in West Malaysia than those in Sabah and Sarawak – BNM attributes this mainly due to differences in risk levels and risk exposure arising from traffic density and road conditions.
It added that the observations do not take into account more specific individual risk factors that insurers may apply in calculating premiums for individual policies, where an insurer can apply additional factors to adjust premiums either higher or lower than that indicated by their pricing models.
If you’ve started paying for a motor comprehensive insurance policy from July 1, has there been an increase or decrease in your premium, and was finding the right policy a fuss-free affair? Share your views with us in the comments section.
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Why do they want to steal a 508?
Came here for this XD.
Cops just need to hang around at nearest Pug 3S and car will be found within a week.
Owners stole own 508s. Geddit?
Maybe you get better return from total lost than selling the car.
Wow…higher price for “High Theft” models. I can imagine next time salesman will say use this as a point to sell their cars. Hello sir, if you buy our car, you’ll have a peace of mind because nobody wants to steal it, insurance premium also lower :)
According to basher logic, Pijot 508 dun have both
Toyota good car, high RV.
This suggests insurers are appropriately differentiating between lower and higher risks consistent with more equitable pricing. It added that a reasonable dispersion of premium adjustments that were less than +10% was observed, suggestive of more refined pricing models by some insurers.
Meanwhile, downward adjustments in premiums were more prevalent for newer cars compared to older cars, but no significant differences were observed across vehicle makes and models, which may
indicate a more cautious approach taken by insurers before fully reflecting risk factors in price adjustments.
Hahaha. So many words.
So what it reads is, price has gone up 10% for most but none was observed to have decreased.
How abt motor rempits?
I am really really skepticalm
Just renewed my 2002 Satria 1.3 insurance on 13 August and my premium is lower compared to last year. Since my car market value is less than 10k since 3 years ago, Tune Insurance still charges based on RM10k market value because that’s the minimum value they will insure (in other words, value too low, can’t make much money la).
So technically there shouldn’t be a fluctuation of premium since min is 10k for the past 3 years and all variable remains the same.. but this year my premium is RM20++ lower.
So, with the liberalisation, I am a happy camper.
Hey brother in law, what insurance do you use? May I know it. Tell me la, brother in law. I want that insurance also.
I usually renewed with Etiqa via myeg. But ths year the quotation seems higher than last year I paid.
Lastly I go for Takaful Ikhlas, as it seems cheaper than others especially Etiqa…around 150 diff
what car u own?
Mine Estima acr50 2.4 year 2010. Roadtax alone almost 800… Those driving V6 surely rich enough coz roadtax far more expensive than insurance alone.
I think there is a mistake in the diagram with arrows, under “Vehicle Age”. “Over 4 years” should have a higher risk profile, not lower, unless the industry knows something i don’t.
Renewed my insurance just recently. Had to shop around online just like what i did before in UK. AIG gave me the lowest premium which is cheaper than what I should pay for the sum insured based on the old formula. Another brand quoted me much higher than what i should pay based on the old formula.
The trick is to shop around!! Spent half an evening doing that.
I smell a web portal or app to cross shop these insurances by providing comparison table based on use input profile to get a rough estimation on price to pay. Any takers?
MIMOS. Goyangkaki photochop boyue…
U dun need to wait gov spoonfeed u the app. Even a 80 yearold grandma can make apps. Lazy much?
Collect gst & cukai buy diamond
The poor ones are getting poorer and poorer. Such liberation only burden the poor one :
-older age car = higher risk premium. Poor ppl are encouraged to change car as often as possible to avoid getting charged a premium insurance fee.
-lesser security feature = higher premium risk. Again, poor ppl are advised to buy higher end car model, not p1 or p2, so that they will escape unnecessary high premiums.
Sadly, what could be done by gomen. Oh wai.
Sadly, what could be done by gomen?
Gud question. Gov shud have the common sense to start, by building more MRTs & LRT extensions and adding buses and legalising other modes of transports so pipu can rely less on motors & older cars. Oh wai…
Keep building & misusing taxpayer money but no service maintenance. You see monorail & JPJ printer rosak..Oh wai
Monorail is cuz Scomi din maintain, not cuz of Prasarana, dunggu.
Jpj printer is cuz 3rd party no spare part part, not cuz of JPJ, double dunggu.
And I rather they misuse taxpayer money and see something, rather than misuse taxpayer money but perpetually in study stage.
We noe right…Petrol price formula, perpetually in study stage. Oh wai…
Petrol price study dun cost anything.
Tunnel price study alredi millions.
Oh wai…
but majority got 6 to 7 kids. So with abah and ibu, got 9 people. how to take LRT to anywhere with 9 people?
Carry also another bayi in stomach. Dukung also a bayi. how to go in LRT
Easy. Each one use TnG card lah! Itu pun mau ajar caveman?
I would foresee more people driving around without a valid road tax since you need insurance to renew road tax. This might in turn encourage people to buy road tax under the table, or fake road tax just to get past a road block.
Then i foresee more roadblocks & more income to polis until lawbreakers sked and get road tax legally or take public transports. Either way, its win-win.
I had to renew before 10th july. Difficult to compare the rates online because most companies require some form of communication thru the phone. 1 company took three weeks to contact me after i registered my interest. In the end, i just renewed with the previous company.
Insurance companies need to be more transparent. Oh, the irony of pipu working in such private sectors yet demand gov to be more transparent.
Thanks for sharing. Looks like best to renew more than 1 month before the expiry. If not, insurance already expired by the time you get a response.
Yes agree, this risk based system is inequality to lower income car owners as the place they stay, park & age of car matters.
Thats all the reason for lower income groups to use more public transports, do community service to reduce crime in their areas (like they used to do), and totally ditch the old unsafe junks.
I just renewed with MSIG insurance, they said no increased in premium even de-tariff start. All remain same as last year. Previously with Tokio marine insurance, they quotation are higher than last year. So I shift to MSIG.
I’done renew my motor vehicle insurance 2 weeks ago. To my surprise, even the vehicle value is drop from year to year, but i had to pay same amount for premium like last year price. Btw, i just went with the same insurance company which is Allianz.
U got conned.
did anyone really steal ssangyong rexton?
or they are abandoned by the roadside and claimed as theft?
Liberalisation should also allow for insurers to come up with policies offering wider and clearer cover instead of continuing to adopt the old and outdated policy wording. It should say in section A ‘loss or damage to the vehicle by accident’ subject to the listed exclusions which should be as few as possible. We see a lot of add-ons which all require extra premium. Additional cover like LLP, LLOP should be made part of standard cover. TPPD limit under section B should be raised to RM10 million to reflect reality in the extent of property damage that can be caused. Different insurers should then introduce policies offering extra benefits and price them accordingly. How do we underwrite vehicles registered in the name of corporate entities? Many risk factors are not available for proper rating unlike those of individuals?. How do insurers deal with fronting by mature drivers for senior drivers over 60 or 65 years old in order to pay a lower premium? Not disclosing senior drivers as named drivers may distort underwriting and rating. They don’t mind paying the 2(f) excess to avoid carrying a higher premium. How do insurers deal with this problem? There are far too many aspects of risk based underwriting which have not been properly considered. This +/-% is not good. The best risks can see up to 10% reduction only but the worst get away with 10% increase. This does not encourage safer driving and care of the vehicles from loss. Those with more than 8 or 10 years maximum NCD should be rewarded with additional 10% special bonus discount. NCD protector should be introduced – when at maximum, you drop two levels for first claim and all with a second within one policy period. Betterment and average should be removed. Sum insured must follow ISM. Compulsory excess of at least RM1000 for young drivers below 25 years.
Now with new ins structure, min third party car ins is rm7K. Previously rm5K. aarg!