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
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
“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
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
“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