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Glimpse into Motor Insurance Renewals and Why Is It Different Now Than Before ( 2018-02-24 )

For more than 30 years, the prices for motor insurance (applicable for car and motorcycle) were controlled, or tariffed, by Bank Negara Malaysia. Due to this tariff scheme, we have been paying practically the same premium for our motor insurance regardless from which insurance company that we purchased the insurance, be it Allianz or AXA etc.

Tariff System

Infographic showing Malaysia car insurance before de-tariffication
Prior to July 2017, motor insurance premium in Malaysia follows a tariff structure which is under the control of the Central Bank. The method of calculation is based on 2 main factors, i.e.:
1. Market value of the vehicle
2. Vehicle engine capacity in CC


Given the calculation method is identically the same across all insurance companies which is based on the type of car model you drive, there is no difference as to the premium paid by you would be similar no matter which insurance company you buy it from, sometimes with a small variance which is mainly due to:
1. Sum insured – different companies may value the vehicle differently
2. Bundling or Packaging – some companies may bundle or package different products such as Personal Accident, into their main motor policy
3. Loading – different companies may have different loading charge for vehicles above 10 years
 

De-tariff System

Infographic displaying Malaysia car insurance after de-tariffication
Since July 2017, Bank Negara has relieved the control over motor insurance premium and adopted the de-tariffication regime, which allowed the insurance companies to price the motor insurance premium freely based on their own risk taking and risk appetite. It may sound new to Malaysians, but it is normal and widely practice in countries such as USA, UK, Germany, Singapore and Australia, to name a few.

Simply saying, following the industry de-tariffication, the insurance companies will now able to implement risk-based pricing in determining the motor insurance premium. That means the insurance companies will be considering several risk factors in determining the premium to be paid by you on your renewal cycle. Apart from the vehicle itself (i.e. market value and engine capacity), the insurance companies will also take into consideration the driver’s driving behaviour and historical claim records in deriving the motor premium. That said, a careful driver who possesses clean driving records such as no claim history, no traffic offense, etc. can expect to pay lower premium compared to their counterpart who doesn’t.

Man in suit showing thumbs up for driver with good driving behaviour
A careful driver who possesses clean driving records such as no claim history, no traffic offense, etc. can expect to pay lower premium.

 

What shall we expect as motorist / car owner?

Man looking at screen showing Malaysia Car Insurance De-Tariffication
As a result of this de-tariff regime, the consumer is set to benefit from the cheaper insurance as the competition between insurance companies is set to grow intense. As the insurance premiums will no longer be same across all insurers, certain insurer may offer you with lower premium just because your risk profile fits for their risk based model. It is therefore essential and beneficial for consumers like you and me to look around and compare the insurance premium offered by different insurance companies before finalizing with one that fits our need and budget. Over the past 6 months since implementation, we have noticed the motor insurance premium differs by as much as 40% between different insurers.

Man holding car steering
It is also important that you shall maintain the good driving behaviour and claims history at all times. Secure your car with alarm and anti-theft system and always park your car at safe location such as covered and guarded parking would help you to score in the risk assessments. Doing all these will help the insurer to identify you and perceive you as lower risk group and hence, lower premium.

Third Party Fire and Theft Cover

Fire at fireworks stall at Kepong Baru that damaged 2 cars and 1 motorcycle

Third Party Fire and Theft Cover protects you against claims from third parties from bodily injury, death, and loss or damage to their property. You will also be able to claim reimbursement against accidental damages from fire and theft of your vehicle, best example is the incident involving fireworks stall at Kepong Baru that damaged 2 cars and a motorcycle recently. (source)

Renew your motor insurance with MyCarsearch

Man in suit showing various premium prices for car insurance in Malaysia after de-tariffication

Renew your motor insurance with MyCarsearch as we give you quick access and free quotations from up to 10 insurance companies in just a single click. Compare between the quotations and decide the insurance companies that meet your requirements. Enjoy 7 years of No Betterment Charge when you renew your motor insurance with us. 

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