Consumers at the forefront
One of the main focus of the liberalisation of motor and fire insurance tariffs is the consumers and how they can benefit more from being better protected by their insurance companies. The de-tariffication of motor and fire insurance is aimed to give consumers more control over insurance products that can tailor to their needs and lifestyle. The new policy also introduces a risk-based assessment pricing system which could encourage consumers to be more careful, in order to improve or maintain their risk profile.
With the liberalisation of the tariff means, insurance companies also can now charge premiums that correspond to the risk profile group of the consumers.
In other words, unlike before, where premiums are charged based on damages or losses inflicted on the property or automotive, insurance companies can now offer premiums based on consumers’ behaviours and their attitude towards minimising damages or losses.
Typically, drivers with good driving records can enjoy a higher percentage of NCD up to 55 per cent.
According to the General Insurance Association Malaysia (PIAM), this also implies that different insurance companies can charge different rates for the same risk profile group based on their business risks models and strategies.
In this new environment, the insurance and takaful industry will have the flexibility to offer motor and fire products with new features at market-based pricing which is based on the risk profile, it added.
“The mechanics behind liberalisation is not only freeing the market price application but for consumers to be more aware of what they are purchasing and how they can get the best for the price they want to pay.
“In a liberalised environment, consumers will become more empowered as they will be able to pick and choose what they want to serve their needs. Liberalisation will also introduce many online distribution channels where shopping for products will be made much easier,” PIAM chief executive officer Mark Lim shared with BizHive Weekly.