More creative motor insurance products with lower prices are expected to roll out following the liberalisation of the motor tariff which came into effect on July 1, 2017, said General Insurance Association of Malaysia (PIAM).
PIAM Deputy Chairman Chua Seck Guan said the detariffication of motor insurance had led to a noticeable increase in product innovation.
“For example, car owners can now purchase the smart key insurance, or opt for additional coverage such as waiver of betterment insurance and flood damage insurance at a lower premium.
“These products were not available during the previous tariff regime,” he told reporters on the sidelines of Bank Negara Malaysia (BNM) Financial Carnival in Kuching, recently.
BNM introduced the first phase of the Liberalisation of the Motor and Fire Tariff on July 1, 2016, which allowed insurers and takaful operators the flexibility to offer new motor products and add-on covers at market-based pricing.
In the second phase, which took effect on July 1 this year, premium pricing for comprehensive, third party, fire and theft motor insurance coverage had been liberalised, wherein the pricing would be determined by individual insurers and takaful operators.
PIAM Chairman Anthony Lee said the recent floods in Penang revealed that only two to four per cent of car owners had insurance coverage against damage by floods as the insurance premium for flood loss was rather expensive prior to the liberalisation exercise.
PIAM Chief Executive Officer Mark Lim said previously, vehicle owners had to pay an extra 0.5 per cent of the sum insured to secure flood coverage.
“For example, for a RM100,000 insurance coverage, the vehicle owner had to fork out RM500 just for flood protection,” he said.
However, after the liberalisation of motor insurance was introduced in July, 2017, the premium to cover damage by floods had decreased to RM250 for a RM100,000 motor coverage, he added.