PETALING JAYA: Motorists will pay more for their insurance premiums from next year under the new motor framework but will reap the benefit of faster claims.
This is the first revision of the motor framework since 1978.
Bank Negara assistant governor Abu Hassan Alshari Yahaya, who announced this on Friday, said the premiums were not expected to have a material impact on the low-income group and the increases would be “gradual”, spread over four years.
After 2016, the premiums would be ‘liberalised’ and determined mostly by market forces.
“The new framework, which will encompass efficiency enhancement measures, is also expected to improve time taken to settle claims from the current average of 1 year to 5 years to 6 - 18 months,” he said.
Abu Hassan stressed that the adjustment would be gradual and “manageable”, refuting a news report published by a local daily Friday which stated that motorists may see premiums rise by about 250% and 450%.
“That is totally incorrect,” Abu Hassan said.
Citing preliminary figures for certain segments, he said for motorcycles 100 cc and below, the increase would be between an annual RM1-RM3.50 (for third party insurance) and RM1-RM2 (for comprehensive insurance) whereas for cars 1,500 cc and below, the increase would be between RM6 to RM34 (third party) and RM7 and RM19 (comprehensive).
The amount of premium paid would be dependable on factors such as the vehicle’s age and the motorist’s history of claims.
“The public can take some adjustment, the fact is that insurance premiums have not been adjusted for a very long time,” he said.
He said engagements had been held with key stake holders such as the police, hospitals and judiciary and a formation of a joint committee among these stake holders to oversee the effective implementation of the proposed framework’s efficiency enhancement measures would be established.
The current motor insurance rating framework has not been reviewed since 1978 and insurance companies have constantly raised the issue of third party motor insurance business being unprofitable given low premiums which did not commensurate with high claim costs.
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