Limited insurance coverage a major concern
AS rescue and salvage operations from the severe floods that hit several states in the peninsula over the weekend are progressing, focus should also be turned on insurance matters as well.
Some have said that flood and storm cover is an add-on for motor insurance. This means that those who want it would be considered “high risk” and hence charged more than necessary.
The result is that only about 10% of Malaysians have such coverage, which is a travesty to the role the general insurance industry is representing.
The general insurance industry has benefited from limited usage of cars in the last two years due to movement restrictions to control the spread of Covid-19, and yet no company has come forward to offer rebates to customers. This is a shame! Perhaps now is the time to repay the loyalty of their customers with quicker payout and more relaxed consideration.
For a start, help the policyholders (even those without flood cover) to seek reputable workshops to flood-clean their cars or even offer to fully subsidise the cost or at least part of the cost of repairs.
Also going forward, flood and storm coverage must be standard coverage in a motor policy, at least offering 50% insured value of the vehicle and flood-cleaning cost. When the majority or all have flood coverage, the premium would be spread over the whole of Malaysia and can then be significantly lower. The add-on now would be to increase the total loss from floods/storms from 50% to 100% at a fairer price.
Householder/houseowner policy penetration is also very low in Malaysia. The premiums need to be lower for various classes of the good risk.
The insurance industry needs to be proactive and guide customers on how to be considered good risk, which normally only requires a small effort.
Those who don’t qualify for good risk flood coverage can still benefit from much more competitive premiums but with co-pay or excess applied until the customers can address their risk factors. Even in flood-prone areas, if there is early warning about floods (can be from government or even the insurance industry association), efforts like moving cars and furniture to higher ground could be very beneficial to limit losses.