Currently, there is a degree of cross-subsidization where lower-risk motorists are offsetting the higher claim cost of others. PIAM is working closely with Bank Negara Malaysia and related government agencies to see how we can further improve road safety and behavior.
In comparison with the current motor insurance framework that rewards drivers based on their no-claims discount (NCD) claims history, the risk-based pricing model incorporates a wider range of factors, including driving behavior, accident frequency, traffic offences, vehicle usage patterns and other relevant underwriting indicators in order to more accurately reflect an individual’s risk exposure.
Risk-based pricing is already standard for most insurance products, such as medical insurance. Pricing depends on the cost incurred through claims, which are then translated into the premiums paid. While motor insurance remains a regulated industry, any enhancements to the framework implemented must remain fair, transparent and appropriate for consumers. The end goal is to reduce the number of road accidents and road fatality rates.
A major pillar of the initiative is to build supporting infrastructure with industry, ideally requiring reliable, timely data from relevant enforcement and regulatory agencies to establish a comprehensive, integrated claims and risk database.
This allows better predictive modelling, allows early identification of high‑risk driving patterns, supports incentivizing good driving behavior and identifies interventions required for risky driving behavior in alignment with the public road safety agenda.
The motor insurance segment of the general insurance industry posted losses of RM289.3 million in 2025. where a combined ratio of 103% reflected that claims payout exceeded premiums collected, and the average cost per claim increased by about 20% to RM8,831 in 2025.
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