Motor Insurance to cost more starting 2012?

Last year, Malaysia Automobile Association (MAA) reported a record number of cars sold. Are you one of them? If you're not in that statistic yet and planning to own a new car now, please read this post which could scare you away.

In fact, petrol prices are heading up again since 2008 with prices of RON97 reviewing monthly. Without failed, the price of RON97 is going up consecutively for the past few months. Anyway, are you driving fuel-efficiency car like me? Despite that I am pumping RON95 petrol and driving the so called "fuel-efficiency" car, I still feel the pain of pumping money.

Source: Malaysia Automobile Association

What to do?

If you don't eat, your car still have to "drink" ma. Uncertainties in Middle East is already spiking up oil prices globally. You think this is the worst for motorists like us?

By "pouring oil on fire" (to make things even worse), government plans to gradually increase motor insurance premiums from 2012 onwards under the new motor insurance framework to be prepared by Bank Negara Malaysia (BNM).

How much more?

Up by between 250% to 450%?

Bank Negara assistant governor citing it totally incorrect. He said the premiums increases would be gradual, and spread over 4 years. See chart below for illustration made. Please take note that the increase will depends on vehicle's age and motorist's history of claims.

www.financemalaysia.blogspot.com

Why we need the new framework?

1. This is the 1st revision since 1978
2. Government plan to do away with tariffs for motor insurance business in 2016
3. Insurance companies are crying over high claim costs which make their business unprofitable

On the flip side, the new scheme would see improvements in the overall delivery system including addressing issues relating to affordability and accessibility to Malaysian Motor Insurance Pool cover. Hence, it could significantly reduce claims settlement period to between 6 - 18 months from more than a year currently.

According to Bank Negara, the motor insurance business incurred an estimated annual loss of RM650 million as at 2009/2010, which means the motor insurance business is unsustainable if we don't act now.

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2. Fraudulent Insurance Claims and YOU