29 April 2017

Car Insurance is NOT the same starting July 2017... Good or Bad ???

From July 1 onwards, the premium rates for motor comprehensive insurance will be liberalized where premium pricing will be determined by respective insurers and takaful operators. In summary, it's based on flexible pricing mechanism.


The aim of the liberalization was to gradually move the tariff towards pricing that was more equitable to take into account broader risk factors and reduce cross-subsidisation across business classes and risk groups.


Current Calculation of Premium
=

Sum assured based on model of vehicle


+ Loading such as driver's age (if any)
+ Additional Benefits (etc. windscreen, flood...)
- No Claim Discount (NCD) of up to 55%


What are the factors included in determining the premium?


  1. Car Model
    As usual, it's more expensive for a car model of higher CC (because you have a tendency and ability to speed). Other than that, an insurer will also take into consideration of the model deemed 'popular by thieves' which considered as higher risk of being stolen.

  2. Car Usage Record
    This is a new factor and the insurer will adjust the premium based on how frequent you drive that car. For low usage car, then the premium will be cheaper. How to determine the usage? It will be based on the mileage record according to the number of years...

  3. Car's age
    Old car (more than 10 years) normally with excess or loading from an insurer as practicing currently. Old people checked into hospital more frequently, same goes to your car checked into car workshop when old :)

  4. Occupation of Driver
    If your occupation only is a normal office job, without traveling, then good news to you. However, for those marketing-related jobs, get ready to pay a higher premium. Meanwhile, if you are an educated person (such as degree and above), cheaper premium also.

  5. Male or Female
    Many people said this is gender discrimination type of factor. Yes, because a female driver can be expecting a cheaper premium. (Anyway, many people thinks that female drivers are even riskier than male...)

  6. Record of Driver
    Sorry to those traffic offenders. Your compounds/saman record will be taking into consideration by the insurer to determine your premium. For sure, your previous claim record will also be counted.

  7. Other factors...
    If you have a good anti-theft and car braking system, it could help reduce the premium as well. Moreover, where you park your car? This will affect your premium as well if you living and parking your car at 'high-risk' area to be determined by each insurer. (Hotspot of vehicle stolen area or flood-prone area...)


Then, how about our No Claim Discount (NCD) ???
No worry. NCD will still be the same as per current practice up to 55% discount as shown below.


How about third-party cover policy?
It is expected that this type of cover will remain status-quo because the majority of these policy owners are from the low-income group, old cars, and motorcycles. Anyway, this is not the focus of insurers due to low-profit margin and higher claim ratio.

Under what circumstances, my premium will be cheapest ???
Good question. It could be for a female degree holder with office administrative job, staying at high-end residential very near to office with clean claim/traffic record, driving a new Perodua MyVi with a good anti-theft system. True?




Let's enjoy this video about the latest motor tariff liberalization by PIAM.

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