25 February, 2011
Motorists to pay more in insurance premiums from 2012: Bank Negara
By YVONNE TAN
PETALING JAYA:Motorists will pay more for their insurance premiums from next year
under the new motor framework but will reap the benefit of faster claims.
This is the first revision of the motor framework since 1978.
Bank Negara assistant governor Abu Hassan Alshari Yahaya, who announced this on
Friday, said the premiums were not expected to have a material impact on the low-income group and the increases
would be “gradual”, spread over four years.
After 2016, the premiums would be ‘liberalised’ and determined mostly by market
“The new framework, which will encompass efficiency enhancement measures, is also
expected to improve time taken to settle claims from the current average of 1 year to 5 years to 6 - 18 months,” he
Abu Hassan stressed that the adjustment would be gradual and “manageable”,
refuting a news report published by a local daily Friday which stated that motorists may see premiums rise by about
250% and 450%.
“That is totally incorrect,” Abu Hassan said.
Citing preliminary figures for certain segments, he said for motorcycles 100 cc
and below, the increase would be between an annual RM1-RM3.50 (for third party insurance) and RM1-RM2 (for
comprehensive insurance) whereas for cars 1,500 cc and below, the increase would be between RM6 to RM34 (third
party) and RM7 and RM19 (comprehensive).
The amount of premium paid would be dependable on factors such as the vehicle’s
age and the motorist’s history of claims.
“The public can take some adjustment, the fact is that insurance premiums have not
been adjusted for a very long time,” he said.
He said engagements had been held with key stake holders such as the police,
hospitals and judiciary and a formation of a joint committee among these stake holders to oversee the effective
implementation of the proposed framework’s efficiency enhancement measures would be established.
The current motor insurance rating framework has not been reviewed since 1978 and
insurance companies have constantly raised the issue of third party motor insurance business being unprofitable
given low premiums which did not commensurate with high claim costs.
According to Bank Negara’s presentations slides on Friday, the motor insurance
business incurred an estimated annual loss of RM650mil as at 2009/2010.
Source: The Star