January 7, 2012
Motor Tariff Premium Rates revised
KUALA LUMPUR: A revision in motor tariff premium rates in Malaysia will take
effect from Jan 16 on a gradual basis over the next four years.
Bank Negara said at a briefing that the premium adjustment, which would be
implemented in small amounts over a measured pace, was expected to have only a marginal impact on the public and
For example, in respect of third-party cover, motorcycles of 100cc would
experience a premium increase of between RM1 and RM3.50 per year over the next four years. For a private car of
1,400cc, the premium adjustment would be in the range of RM6 to RM34 per year over the next four years.
The premium adjustment for commercial vehicles such as outstation taxis and buses,
on the other hand, would see only a minimal impact of less than 10 sen per passenger per trip.
Tariff adjustments aside, the element of loading would still apply based on the
risk profile and age of the vehicles, but the maximum rate of loading would remain unchanged at 150%.
The upcoming revision in motor tariff premium rates forms part of the New Motor
Cover Framework that is aimed at addressing the structural issues within the motor insurance sector to ensure
continuous and sustainable motor protection to users.
It will be the first to be undertaken after more than 30 years of non-revision,
despite the fact that the levels of car ownership, accident rates and claim incidences have risen significantly
over the years, thus putting cost pressures on the country’s motor insurance industry.
Malaysia now has 19 million registered vehicles.
Under the new framework, Bank Negara said the adjustment on motor tariff premium
rates would be reviewed periodically to ensure that the adjusted premium rates would be reflective of the claims
The new measure was expected to pave the way for the de-tariffing of motor
insurance sector in Malaysia by 2016, following which motor premium rates were expected to be further
differentiated according to the risk profile of individual vehicles to ensure fairness to consumers.
The new framework would also encompass enhancing efficiency in claims settlement
Bank Negara said the objective was to ensure that all claims would be settled
within six to 18 months, compared with the present average lead time of up to five years.
As part of an initiative to enhance the efficiency, Bank Negara said it would
introduce a motor insurance claims kit to expedite notification of an accident and claims as well as the
establishment of a nationwide 24-hour call centre to provide immediate roadside assistance to accident victims in
the first quarter.
The central bank is also working on a review of legal fees in bodily injury cases,
measures to incentivise early claims notification and leverage on hospital counters to facilitate claims
notification as well as the development of guidelines on long-term nursing care.
These initiatives are targeted for completion by June.
Source: The Star