Insurance group urges govt to study new vehicle insurance policy

The General Insurance Agents Association of Malaysia (Perwakim) has urged the government to conduct a thorough study before implementing the new streamlined motor vehicle insurance framework.

Its president Athi Rao said the new scheme is only a short-term solution as the claims settlement sysem is still not optimal, and suggested the government sit down with industry representatives to reach a mutually beneficial solution.

"Although premium payments will go up, if the claims settlement sysem is not also reviewed, the situation will be the same as now. We suggest that companies exercise caution in handling claims. For us, raising the premium will further burden the consumer," he told Bernama here.

Yesterday at the Dewan Rakyat, Deputy Finance Minister Datuk Dr Awang Adek Hussin said the new, higher vehicle insurance premium rates will be implemented gradually in stages from this year until 2015 so as not to burden vehicle owners.

Athi said inefficient supervision has led to higher claim settlements as the process involves external factors such as payments to intermediaries.

There is also no pressing need to raise the premium payments now as the industry is not in such a critical stage as alleged by some people, he said.

In 2011, he said, motor vehicle premium payments totalled RM6.3 billion but payments for repair of vehicles amounted to RM4.7 billion including RM600 million as compensation for stolen vehicle claims, just 76 per cent of the total premium collection, meaning insurance companies made a 24 per cent profit.