PETALING JAYA: Motorists will need to pay more for their insurance premiums from next year under a new framework but will enjoy faster claims.
Bank Negara assistant governor Abu Hassan Alshari Yahaya who announced this yesterday said the premiums were not expected to have a material impact on the low-income group as the increase would be spread over four years.
After 2016, the premiums would be liberalised and determined mostly by market forces.
“The new framework is also expected to improve the time taken to settle claims from the current average of one to five years to six to 18 months,” he said at a media briefing here yesterday.
Abu Hassan stressed that the adjustment would be “manageable”, refuting a report in a local daily which stated that motorists may see premiums rise by between 250% and 450%.
“That is totally incorrect,” he said.
Citing preliminary figures for certain segments, he said for motorcycles 100cc and below, the annual increase would be between RM1 to RM3.50 (for third party insurance) and RM1 to RM2 (for comprehensive insurance).
For cars 1,500cc and below, the annual increase would be RM6 to RM34 (third party) and RM7 to RM19 (comprehensive).
The amount of premiums paid would depend on factors such as the vehicle’s age and the motorist’s history of claims.
“The fact is that insurance premiums have not been adjusted for a very long time,” he said.
Abu Hassan said discussions had been held with key stakeholders such as the police, hospitals and judiciary. A joint committee will also be established.
The current motor insurance rating framework has not been reviewed since 1978 and insurance companies have constantly raised the issue of the third party motor insurance business being unprofitable given low premiums which are not commensurate with high claim costs.
According to Bank Negara, the motor insurance business incurred an estimated annual loss of RM650mil as at 2009/2010. - theStar