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March 12, 2011

New motor cover framework to take off in 2012

KUALA LUMPUR: Motorists will still pay affordable rates for motor insurance policies and receive better service once the new motor cover framework begins next year.

Bank Negara said the new motor insurance would only see a marginal increase in premiums while taxis and rented vehicles with good claims records could see a reduction in insurance costs or a lower quantum of increase in premiums.

“The tariff that has not been revised for more than 30 years has been a major source of the difficulties faced by the public in recent years.

“While the premium has not been adjusted, there has been significant increases in the level of car ownership, accident rate and claims,” it said in a statement.

Under the new framework, Bank Negara said premium adjustments starting next year would be small and implemented gradually over a period of four years.

It said for third party cover, those owning motorcycles of 110cc will have to pay premium increases of between RM1 and RM3.50 per year, or a maximum of 30sen a month, over the next four years.

For private cars of 1,400cc, the premium adjustment will be between RM6 and RM34 per year (a maximum of RM2.80 per month) over the same period.

For commercial vehicles such as outstation taxis and buses, the impact of the premium adjustment on the passengers would be minimal at less than 10sen per passenger.

“The new framework would also involve immediate implementation of critical measures to enhance efficiency in claims settlement, including the establishment of a nationwide 24-hour call centre to provide immediate roadside assistance to accident victims, facilitating early and simpler claims notification, shorter timelines to produce police and medical reports and enhancing public awareness on making more prompt motor insurance claims,” Bank Negara said.

It said the enhancements would reduce the average claims settlement period from the present one to five years to six to 18 months.

For private cars older than 10 years of age, the central bank said it was reviewing the Malaysian Motor Insurance Pool (MMIP) to ensure motor vehicle owners are not necessarily deemed as high risk and will have greater access to motor cover at a lower premium.

The central bank also said insurance companies were prohibited from forcing car owners to buy a personal accident policy when purchasing motor insurance.

The statement added that those who had difficulty in obtaining motor covers and compelled to buy additional covers should contact Bank Negara at 1-300-88-5465.

Source: The Star