STRONGER GROWTH IN IN­SURANCE SEC­TOR SEEN

Source: The Star, 21 Au­gust 2012

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The re­cent le­gal suit brought by Sil­ver Bird Group Bhd against its au­di­tors may bring pro­fes­sional in­dem­nity in­surance into play. In­dus­try play­ers see this class of in­surance gain­ing stronger growth and promi­nence in the next few years. This is due to greater aware­ness among con­sumers and com­pa­nies that they have the le­gal right to sue for pro­fes­sional neg­li­gence and the ris­ing num­ber of pro­fes­sion­als in the coun­try. Pro­fes­sional in­dem­nity in­surance cov­ers pro­fes­sion­als for claims made against them by their clients for losses in­curred from neg­li­gence or breach of duty of care. Ac­cord­ing to Al­lianz Gen­eral In­surance Com­pany (M) Bhd CEO, Zakri Khir, the de­mand for pro­fes­sional in­dem­nity in­surance has surged as more pro­fes­sion­als re­alise the im­por­tance of this in­surance cover and oth­ers buy­ing it to meet re­quire­ments by pro­fes­sional bod­ies or con­trac­tual obli­ga­tions im­posed by the prin­ci­pal. While the de­mand for pro­fes­sional in­dem­nity in­surance was ex­pected to in­crease, Zakri does not see pre­mi­ums go­ing up in tan­dem with this in­crease partly due to com­pe­ti­tion among the in­surance com­pa­nies to in­crease mar­ket share. He pointed out that con­sumers were also more price-sen­si­tive to­wards the in­surance cost rather than their prod­uct provider. Ac­cord­ing to ACE Jerneh In­surance Bhd coun­try pres­i­dent, Steve Crouch, the ex­ten­sion of the tax de­duc­tion for pro­fes­sional in­dem­nity in­surance pre­mium ex­pense to all pro­fes­sion­als, there is ex­pec­ta­tions to see an uptick in de­mand for this type of in­surance, es­pe­cially as the small and medium en­ter­prise in­dus­try grows and more pro­fes­sion­als

ven­ture into pri­vate prac­tice. In 2009, the tax de­duc­tion for this in­surance pre­mium ex­pense was ex­tended to all pro­fes­sion­als who un­der­took the busi­ness of their pro­fes­sion; re­gard­less of whether the pur­chase of a pro­fes­sional in­dem­nity in­surance pol­icy was a re­quire­ment un­der the pro­fes­sion's by-laws or statute.

In Malaysia, Crouch ob­served that this type of in­surance was not as preva­lent com­pared with devel­oped and liti­gious coun­tries like the United States, Aus­tralia and Europe. As the Malaysian mar­ket be­comes more af­flu­ent and so­phis­ti­cated, pro­fes­sional in­dem­nity in­surance would be­come an im­por­tant part of risk man­age­ment, es­pe­cially for the ser­vice in­dus­try, to pro­tect their busi­ness in­ter­ests against le­gal claims for busi­ness own­ers and their em­ploy­ees.

ACE Jerneh In­surance Bhd does not en­vis­age a rise in pre­mium rates re­sult­ing from an in­creased in de­mand, not­ing that pre­mi­ums for pro­fes­sional in­dem­nity in­surance were largely based on cov­er­age re­quired and var­ied by in­dus­try.

Zakri Khir, CEO, Al­lianz Gen­eral In­surance Com­pany

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