A steady shift in the insurance industry

As we enter the next phase of this liberalisation, how prepared are insurers in terms of setting up this new policy and how will they benefit from this liberalisation?

From a quick observation on major banks and insurance agencies in Malaysia, since early July this year, a few major insurance agencies have started holding campaigns to build the awareness of this change in the insurance industry.

According to PIAM, with effect from July 1, 2016, insurers are allowed to introduce new products for both the motor and fire classes.

It also noted that proper vetting and clearance by PIAM on the policy wordings is necessary so as not to create any confusion amongst consumers, especially on the coverage and benefits provided.

In this regard, the association set up an Industry Product Review Board (IPREB) in August 2016 with the objective to review these new product offerings by insurers and to ensure they are in line with the requirements issued by BNM.

“As at to-date PIAM has reviewed the wordings of 45 new Motor products and 21 new Fire products.

“Insurance companies who have had their products approved are launching them based on their targeted launch dates,” Lim revealed. How will insurers benefit from this liberalisation?

However, after more than 30 years of using the old system, the bigger question here is, why now and how will insurance companies and agents benefit from a de-tariffed motor and fire insurance system?

PIAM answers, as Malaysia progresses towards a developed nation status, the insurance industry has to catch up too by opening up its market to allow a more equitable approach to the charging of premium.

“Any progressive nation has to have an open market to allow competition. Companies should be given an opportunity to compete in the market if they want to grow or progress.

“In addition to providing companies with these opportunities, it also gives consumers an opportunity to sample and purchase products that are unique or special and are customised to suit their needs,” said Lim.

In a liberalised environment, a good risk should be rewarded whilst a bad risk recognised.