Bank Negara Malaysia would like to provide a statement on the new motor cover framework. It will provide a holistic solution to the issues that have been raised. This new framework will address in particular the concerns of high premiums and difficulty in having access to motor cover. A two-pronged strategy has been adopted to enhance efficiency in the provision of motor cover with a gradual price adjustment that will ensure that the public is able to purchase motor insurance at affordable premiums, benefit from a much better service and secure early compensation.

The tariff that has not been revised for more than 30 years has been a major source of the difficulties faced by the public in these recent years. While the premium has not been adjusted, there has been significant increases in the level of car ownership, accident rate and claims.

Under the new framework, premium adjustments which will take effect from 1 January 2012 will be small and implemented gradually over a period of four years. For example, for Third Party cover, motorcycles of 110 cc will experience a premium increase of between RM1.00 - RM3.50 per year (a maximum of 30 sen per month) over the next four years. For a private car of 1,400 cc, the premium adjustment will be between RM6.00 - RM34.00 per year (a maximum of RM2.80 per month) over the same period. For commercial vehicles such as outstation taxis and buses, the impact of the premium adjustment on the passengers would be minimal at less than 10 sen per passenger. Categories of vehicles such as hire and drive taxis which have good claims record will benefit from a reduction in premiums or lower quantum of increase in premiums.

The new framework would also involve immediate implementation of critical measures to enhance efficiency in claims settlement including the establishment of a nationwide 24-hour call centre to provide immediate roadside assistance to accident victims, facilitating early and simpler claims notification, shorter timelines to produce police and medical reports, and enhancing public awareness on making more prompt motor insurance claims. These enhancements will significantly reduce the average claims settlement period from the present 1 to 5 years to 6 to 18 months. A Joint Working Committee (JWC), chaired by Bank Negara Malaysia comprising representatives from key Government ministries, the insurance industry and consumer and business groups will oversee the successful implementation of these identified measures.

Currently, some private vehicle owners have been subjected to high premiums arising from policies purchased from the Malaysian Motor Insurance Pool (MMIP), which is the insurer of last resort. While this had been widely highlighted and reported, this accounts for only about 2% of the total number of vehicles insured in Malaysia. It comprises mainly private cars of more than 10 years old. To address this issue, the rules and operations of the MMIP is being reviewed to ensure that these motor vehicle owners are not necessarily deemed as high risk and will have greater access to motor cover at a lower premium. For the pure high risks vehicles, access to such cover would be available through the MMIP but will be subject to the appropriate premium commensurate with the risk.

Bank Negara Malaysia prohibits insurance companies to compel policy owners to purchase additional non motor related cover such as personal accident policy, when purchasing motor cover. Bank Negara Malaysia will take stern action on such errant companies. Since 2009, a total of 37 complaints on forced selling were received and actions have been taken on the insurance companies that have resulted in premiums being refunded to the policy holders. Members of the public who have difficulty obtaining motor cover or who have been compelled to buy other covers are advised to contact the Bank Negara Malaysia hotline directly at TELELINK: 1 300 88 5465.