KUALA LUMPUR, March 23 — The General Insurance Association of Malaysia (PIAM), the trade association for licensed direct and reinsurance companies for general insurance, has clarified that it is not involved in the pricing decisions made by its members.
It said during the phased liberalisation period beginning July 1, 2016 to drive product innovation and competition, insurers are allowed to introduce new motor products to better serve consumers’ needs and priced them according to their respective risk pricing models, subject to parameters of plus/minus 10 per cent from the original tariff rates as at June 30, 2016.
The limitation thresholds are meant to cushion the impact of any sudden and significant changes in premium with potential adverse impact on consumers.
Any deviation from the aforementioned threshold will require the approval of the industry regulator, Bank Negara Malaysia (BNM), it added.
“PIAM hopes this clarifies to the motoring public and other stakeholders that while the process initiated for the gradual removal of requirements under the motor tariff has begun, pricing continues to be regulated by the industry regulator.
“Going forward, the industry eagerly anticipates further liberalisation and looks forward to working with BNM on the eventual opening up of the motor market,” it said in a statement today.
PIAM’s clarification was to address prevailing perceptions on the status of ‘phased liberalisation’ on motor tariff and whether the motor insurance industry can be accurately described as an open market with total freedom in pricing.
On the Covid-19 impact on the motor insurance industry, it said the motor business weakened due to poor consumer demand.
According to the Malaysian Automotive Association, the total industry volume (sales of new passenger and commercial vehicles) registered in 2020 was 529,434 units, a decrease of 12.4 per cent compared with 2019.
Gross Direct Premium for motor insurance fell by 0.21 per cent in 2020 compared with 2019.
PIAM believed that full liberalisation would lead to fairer pricing that would benefit safe drivers and lead to more product innovation, technologically-driven consumer solutions, and a better overall consumer experience.
Meanwhile, PIAM said the general insurance industry was a contributor to the RM8 million Covid-19 Test Fund (MyCTF) for medical insurance policyholders.
MyCTF initiative was created to support the Health Ministry’s effort to conduct more Covid-19 tests as part of public health measures.
Qualified claimants who need financial help to test for Covid1-9 are able to seek reimbursement of up to RM300.
In December 2020, MyCTF broadened its reimbursement criteria to include claims from asymptomatic patients and hospital admissions.
— Bernama
