Malaysia Motor Insurance - Unfair To Policyowner

Motor insurance practices that are allegedly unfair to consumers are now being sorted out by the authorities and the Federation of Malaysian Consumers Association (Fomca).These alleged practices include failure to cover the full amount of repair costs quoted, lengthy claim settlements that drag on for months and refusal to compensate consumers for loss of use of the vehicle.

Fomca said Bank Negara must protect consumers in such situations. Bank Negara has contacted Fomca, saying it took such matters seriously and is reviewing the issues. BN have asked Fomca for more information on specific cases and the points we have raised in order for them to respond.

Between January and March, a total of 86 complaints on motor insurance and workshops were received by Fomca through the NCCC. From 2019 to 2020, we received 1,354 complaints involving insurance for vehicles and property.

When claiming motor insurance, one common issue faced by consumers was being denied their right to choose the workshop to repair their vehicles even though the workshop is registered under the General Insurance Association of Malaysia (PIAM) and Road Transport Department. Consumers may want their regular mechanic as they have more confidence in them, adding however that they were only allowed to send their cars to workshops under the insurer’s panel.

Insurers will appoint their own adjuster to evaluate the amount of damage so there is no need to insist that consumers send the vehicles to the insurer’s panel workshop. Panel workshops should be taken out in the terms and conditions of insurance policies and Bank Negara should come up with standard operating procedures on this to be fair to consumers.

Fomca called on the central bank to ensure that third party claims (when a driver claims from the insurer of the driver at fault) to be made easier and done within a specified time. For some consumers, the waiting period is agonising, with several cases dragging on over three months. If the driver only has one vehicle, it is troublesome as the car is kept in the workshop for months. No temporary car for use is offered or payment for loss of use is given to the policy holder.

Bank Negara must impose rules whereby consumers are compensated if their vehicles are kept too long without any repair work done beyond a stipulated time. Consumers faced with this situation are advised to email to the authorities such as Bank Negara, Ombudsman for Financial Services, the insurance companies involved and PIAM.