Increasing Motor Insurance Premium

Yesterday at the Dewan Rakyat, Deputy Finance Minister Awang Adek Hussin said the new, higher vehicle insurance premium rates will be implemented gradually in stages from this year until 2015 so as not to burden vehicle owners.

Insurance agents in the country are against a proposal to raise premium payments on motor vehicles. The General Insurance Agents Association Malaysia (Perwakim) instead wants the government to conduct a thorough study before implementing the new streamlined motor vehicle insurance framework.

Its president Athi Rao said the new scheme is only a short-term solution as the claims settlement system is still not optimal. He suggested instead that the government sit down with industry representatives to reach a mutually beneficial solution. Athi said inefficient supervision had led to higher claim settlements as the process involves external factors such as payments to intermediaries.

He added that in 2011, motor vehicle premium payments totaled RM6.3 billion but payments for repair of vehicles amounted to RM4.7 billion including RM600 million as compensation for stolen vehicle claims, just 76 per cent of the total premium collection, meaning insurance companies made a 24 per cent profit.