Motorists will have more choices for vehicle insurance products when the liberalisation of motor tariffs is put into place later this year.
Bank Negara assistant governor Jessica Chew said that come July 1, insurers and takaful operators would no longer be bound by a set of fixed prices for insurance products.
She said that they would instead be able to take into account a host of risk factors and adjust premiums accordingly.
Among the factors was the area that a vehicle would be driven in and a driver’s safety track record.
Chew told reporters during a briefing that someone who has a history of reckless driving would have to pay higher premiums.
Good drivers, she said, would no longer have to subsidise the reckless ones, which was how the current system worked.
“This will allow consumers from the lowrisk groups to enjoy lower premiums,” she said, adding that this would also help promote safe driving.
“Consumers should benefit from the more liberalised market where you have more choices and more control over what you pay for,” said Chew.
She said the liberalisation of motor tariffs would involve the comprehensive, third party as well as fire and theft insurance covers.
“This will help us move towards pricing that is more equitable and fairer,” she said.
Liberalisation would also allow for more innovation in the motor insurance industry, according to her.
“This process is part of an evolution that needs to happen in order for insurance companies to expand the range of products they offer to consumers to meet the different needs,” she said.
The healthy competition that will result from the move would ultimately lead to better service quality and customer experience, she said.
Source – The Star (25 April 2017)