Change for the better

CHANGES to how a market operates will always bring disruption. When regulations are relaxed, generally, it is a time when consumers will win.

The same happened with the cellular telecommunications industry, where number portability allowed people to retain their phone numbers and have the ability to shop around for the best deal for themselves.

A situation where consumers will win is expected with the liberalisation of comprehensive motor insurance tariffs starting today.

In the past, the parameters for insuring vehicles were pretty static, but now, a different criteria will determine what consumers will pay for insuring their motor vehicles. In essence, good drivers will expect to pay lower premiums than bad drivers.

With the ability to shop around for better rates, the expectation is that there will be more competition within the industry. Allianz Malaysia Bhd, with its grasp on insur- ing vehicles sold by Mercedes and BMW, commands the largest share of the comprehensive motor vehicle insurance wallet. The challenge now is for the others to see if they can entice good drivers of high-end vehicles to switch insurers. The next couple of years will be an interesting time for the industry, where the switching of customers might just mirror what had happened in the mobile phone sector.

But in the motor industry, claims are what determine profitability. If a person has a bad record, then he or she will be expected to pay more for insurance. The same is with younger drivers with no track record. What the industry should not evolve to is the cost of insuring a vehicle becoming too punitive for vehicle ownership.

Liberalisation will inculcate the need to be better drivers, which, in turn, will make roads a much safer place for people to travel. If peo- ple know that a transgression - just like how not paying your bills and getting yourself blacklisted will hurt your credit score – will hit their wallets, then expect liberalisation to have a good side effect on driving manners.