Cheaper to renew directly if premiums are raised

PETALING JAYA: Policyholders will be able to buy or renew their motor insurance policies directly with insurance companies at a discount if the proposal by insurance companies to raise motor premiums is approved, according to industry sources.

It is learnt that Bank Negara is in discussion with motor insurance players and has requested them to provide discounts if it decides to approve a hike in motor insurance premiums as requested by the industry due to rising motor insurance claims.

A 30-year veteran of the insurance industry told StarBiz the move would allow policyholders an option to either walk in and buy directly over the counter at a discount from insurers or they could buy through their agents, whereby they would have to pay a 10% commission.

Subject to approval from the central bank, the rate of discount being studied at the moment is 5% in the first year and 10% in the second year and thereafter, in addition to benefits like the no claims bonus (NCB), according to the source.

The first year discount is limited to new motor policies and the subsequent ones are for renewals, he added.

The General Insurance Association of Malaysia (PIAM) has declined to comment on the matter.

Insurers had been persistently asking Bank Negara to raise motor premiums since the last one took effect in 1978, citing higher motor claims, surging vehicle thefts and the rising cost of automotive repairs.

Federation of Malaysian Consumer Association secretary-general and chief executive Muhammad Sha’ani Abdullah said the move to allow consumers to buy motor policies over the counter was laudable as it would eliminate abuses by agents.

“Many people buying or renewing motor or non-motor policies are forced by their agents to buy other general insurance products which are unrelated. “This is something which we view as an abuse by agents and (it is) forced selling.

“We support this proposal as it will benefit consumers and check the growing abuses by agents,’’ Muhammad Sha’ani said.

But the industry source said the move to allow customers to buy motor insurance policies directly at a discount from insurance companies would affect the income of agents and their staff.

“There are about 40,000 general insurance agents in the country, of which 15,000 are full-time agents.

“On average, each agent or agency employs between three and 30 people.

“By allowing customers to buy or renew motor policies at a discount, it will erode the income of more than 50,000 employees of insurance agents, which will cause them to be unemployed,” he said.

An agent who declined to be named said agents helped in the penetration of insurance in remote and rural areas where there were limited insurance branches.

“Apart from selling insurance, we also provide claims management and monitoring of claims on behalf of customers.

“Unless the central bank has specific plans to redeploy the unemployed staff, it is going to worsen the current economic situation,” he said.

Some of the leading motor insurance insurers in the country are Kurnia Insurans (with a market share of more than 20%), AmAssurance, Allianz Malaysia Bhd and Tokio Marine.

Allianz General Insurance Company (M) Bhd chief executive Ng Hang Ming said in an e-mail reply that his company had “not received any directive to revise motor premiums upwards.”

“To date, we have not received any directive on this issue of rebate to direct customers. In respect of commission to agents, it still remains unchanged at 10%,’’ Ng said.