Motor insurance and takaful in Malaysia is in urgent need for modernization. The existing system is no longer sustainable and is misaligned with the countries aspirations in the areas of road safety, automotive sector development as well as consumer protection.Read the full news from Bernama below.
CALL TO INTRODUCE RISK-BASED RATING SYSTEM FOR MOTOR INSURANCE.
KUALA LUMPUR, May 13 — The country needs a risk-based rating system for motor insurance as it ensures that the premium reflects the risk characteristics of the individual and vehicle that is being insured.
Chief executive officer of Insurance Services Malaysia Bhd (ISM), Carl Rajendram, said the existing system was no longer sustainable and was misaligned with the country’s aspirations in the area of road safety, automotive sector development as well as consumer protection.
“Although individuals aged between 21 and 30 years represented only one-fifth of motor insurance holders, their average claims frequency was 47 per cent higher than the 41-to-45 age group,” he said in his presentation of ISM’s 2009 Motor Insurance and Takaful Statistics Report here Thursday.
He said vehicles with good safety and anti-theft systems meeting the Malaysian or European Union standard should pay comparatively lower premium than those with sub-standard systems.
“Currently, both groups are still charged similar premium.
“In other markets, risk characteristics such as age, gender, driving record, vehicle make and model as well as location determined the cost of motor insurance,” he said.
ISM is a shared services company that provides statistics and information on insurance coverage and claims to insurance companies and takaful operators.