RISK FACTOR
PETALING JAYA: High risk profile drivers, including habitual traffic offenders, can expect to pay higher motor insurance premiums from July 1.
Under the Phase Liberalisation in Motor Insurance, the amount one pays for insurance will no longer be determined by fixed price lists, but by his or her risk profile.
General Insurance Association of Malaysia ( PIAM) corporate communications manager Kuan Shook Quan said on the other hand, it would mean lower premiums for lower risk drivers with good records on the road.
This means that a good driver should pay less premium compared to another driver in a class that is more likely to experience accidents, she said.
This is in line with a move by Bank Negara Malaysia to liberalise the motor insurance industry and at
the same time, encourage safe driving habits.
Under the new system, premiums would be charged taking into account the “risk profile” of the insured, which include: driving behaviour; driving experience; claims history; the present model, age and engine capacity of the insured vehicle; and safety and security features of the vehicle. Apart from safer driving habits, installation of car telematics or certified anti-theft devices for cars that help reduce theft will also help to reduce the premium, she told theSun.
Other factors include duration the vehicle is on the road, geographical location of the vehicle (in areas with higher incidents of theft) and traffic offences on record.
She said the policy provides an incentive for perceived bad drivers to be better and be rewarded with a reduction in their premium.
The move will also encourage innovation and competition among insurers and takaful operators as they can charge premiums in line with broader risk factors and sell new products that are not defined under a tariff.
Kuan said liberalised insurance pricing would apply to all motor comprehensive products and theft products, with premium pricing to be determined by individual insurers and takaful operators.
“However, premium rates for motor third party products will continue to be subjected to tariff rates,” she said.
The “No Claim Discount” policy will remain unchanged and continue to be transferable from one insurer or takaful operator to another.
This means theoretically, no two insurers will have identical pricing for a motor comprehensive policy.
“There is no fixed system of calculation, but similar to riskbased insurance, several standard risk factors will be considered by insurance companies to determine premiums.”
She said different insurers will have different ways of defining the risk profile group, so the price of a motor policy would differ from one insurer to another.
“They should shop around and get the best insurance coverage that meets their needs and at a price best suits them.”
However, consumers are cautioned that a lower price may not always mean a better product. Proper assessment and due diligence must be done,” she said.
PIAM is of the view that consumers will benefit from an improvement in the quality of service and a wider range of products at competitive prices due to greater competition among insurers.
It fully supports the Kejara System introduced last month as it will make drivers exercise more care when driving and insurers may in future incorporate the Kejara system as one of the factors in risk profiling.