Post-liberalisation, this is why your car's insurance cost isn't coming down, yet

In 2016, Bank Negara Malaysia (BNM) began the move to liberalise motor insurance premiums. Now the General Insurance Association of Malaysia (PIAM) has released a statement to clarify that although the process has already begun, pricing continues to be set by BNM.

“PIAM hopes the above clarifies to the motoring public and other stakeholders that while the process initiated for the gradual removal of requirements under the motor tariff has begun, pricing continues to be regulated by the industry regulator.”

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“It is important to note that PIAM is not involved in the pricing decisions of its members. Going forward, the industry eagerly anticipates further liberalisation and looks forward to working with BNM on the eventual opening up of the motor market.”

The move to liberalise motor tariffs was introduced to reduce the impact of changes in premium to consumers.

In order to drive product innovation and competition, insurers are allowed to introduce new motor insurance products to better serve the needs of consumers and price them according to the insurers’ respective risk pricing models.

The prices of these new products are subjected to a range of just 10 percent from the original tariff rates as of 30 June 2016.

Any more from the 10 percent threshold, the insurance company will require approval from BNM.

PIAM, which represents 26 member companies, said that full liberalisation not only means the introduction of more innovative products, but also fairer pricing that will benefit safe drivers.