What should consumers be aware about?

As a consumer, PIAM noted that you can expect a wider range of motor and fire insurance products to cater for your lifestyle needs, along with preferred channels to purchase motor and fire insurance protection and higher quality of services provided by agents.

It also pointed out that premium charged on products will also vary from one insurance company to another based on their business risks models and strategies.

“Over time, it is expected that premium rates for both motor and fire insurance will adjust and align to the underlying risk, thus allowing vehicle owners and property owners with low risk profiles to be charged lower premium rates,” it said on its website.

However, PIAM also stressed that consumers should look beyond the pricing of their motor or fire protection plans.

“Consumer should not be looking at pricing as the only factor when purchasing a motor insurance protection plan.

“They should also look for what the policy covers, innovative features and customer service standards. Consumers should shop around to make informed purchasing decisions.

“As each insurance company is expected to be guided by its own identified risk factors in order to determine the premiums, the price of a motor policy would differ from one insurer to another,” Lim advised.

He added, under the phased liberalised environment, more factors will be taken into account in determining the premiums.

“Other than the sum insured, cubic capacity of the vehicle, age of the vehicle and age of the driver, premiums may also be based on the safety and security features of the vehicles, duration that the vehicle is on the road, geographical location of the vehicle and traffic offences on record,” he noted.

PIAM also advised that consumers should shop around and compare for appropriate covers and premium rates, and this should be done early before the policy expires. More than just a product

Overall, a major challenge in implementing this new system is creating awareness and educating the public on the liberalisation of motor and fire insurance tariffs and how it will affect them.

In a quick survey, BizHive Weekly discovered that most consumers generally believe that when they renew their road tax, all they need to do is purchase a motor insurance to renew their road tax.

PIAM echoed this observation and noted that this goes the same for the fire protection policy, whereby consumers are only aware that they need to purchase an insurance plan to take up the re-payment loan.

However, now, it goes beyond that as insurance companies now offer more comprehensive packages while the risk-based assessment also factors the price consumers have to pay for.

“It is important for every citizen to know what is insurance and how it protects and help them in their times of need,” Lim pointed out.

Earlier this year, a National Consumer Education Campaign (NCEC) was launched to create awareness and educate the public not just on liberalisation but also on the benefits of insurance protection as a whole.

“The NCEC is also a campaign that runs parallel with the government’s initiative under the Economic Transformation Plan (ETP) to transform the country into a high-income nation and increase insurance market penetration.

“Market penetration will also result in financial inclusion which is important at all levels to ensure consumers are adequately protected and will be compensated for their losses,” Lim explained.

Aside from that, he also noted

that with the liberalisation of motor and fire insurance tariffs, it is hoped that the change would make consumers better drivers or better property owners.

“Recent statistics indicate that the total number of accidents recorded in 2016 increased to 521,466 from 489,606 in 2015. This on average is a seven per cent increase. Total deaths caused by road accidents also increased by seven per cent to 7,152 in 2016 compared to 6,706 in 2015,” he said.

He added, “The association has continuously promoted road safety through its various campaigns held during the General Insurance Day and other public events. The consumers need to know that safe driving will be one of the factors that can help to lower their risk profiles and therefore benefit them in a de-tariffed market.”

PIAM will also be collaborating with the Malaysian Institute of Road Safety Research (MIROS) and has recently signed a Memorandum of Understanding to combine their efforts in promoting road safety.