Top Things You Should Know About The New Motor Insurance De-Tariffication In Malaysia

Some of you may have heard about the changes to motor insurance that will happen soon, but how much do you really know about de-tariffication?

In the past few decades, buying or renewing a motor insurance policy has been a pretty much straightforward process. Your premium is determined by the type of model, the age of the car, the engine capacity of your vehicle, and no claim discount up to 55% if you don’t make a claim.

However, in July 2017, the motor insurance market will be de-tariffied in Malaysia which will change the way you purchase motor insurance. Let’s find out more.


How Will De-Tariffication Affect Me?

Let’s use Teh Ais - a favourite drink among Malaysians - as an example;

If the cost of a glass of Teh Ais were regulated by the government and is set at between RM2.20 to RM2.50 per glass that would mean it’s a tariffed product. If the >government later decides to de-tariff Teh Ais, the restaurants and eateries are then free to charge a glass of Teh Ais according to their incurred costs and discretion.

What Are The Factors That Determine The Premium?

Insurance providers can adjust premium rates based on your risk factors as a driver, which is known as a “Risk-Based Premium Calculation”. The higher your risk is, the higher your premium will be. Some of these factors include:

  • Gender
  • Age
  • Vehicle make and model
  • Claims history
  • Occupation
  • Place of residence
  • Use of vehicle

These are just a few of the risk factors that insurers will take into consideration when determining your premium rate. Countries like Germany, China, USA, UK, and Singapore have beat us to it by years. So don’t worry, it’s hardly a new concept!

How Will It Benefit You?

So, here are some things we think will benefit you as a customer:

  • New innovative insurance products to cater to a wider range of customer profiles. Even a husband and wife living in a same household can now have different motor insurance plans to cater their different needs.
  • Smoother and more efficient services. Now that the market is competitive, insurance providers will go all out in terms of improved product and services to win you over.
  • Fairer price based on risk profile. Drivers with safe driving behavior will be seen as having a lower risk profile and they will likely pay less for their motor insurance.

How Can You Prepare For It?

Here are some of the things that you can do to prepare for the changes:

  • Lower your risks as a driver as much as possible, as soon as you can. If you’re prone to reckless driving (a habit you should lose for your own safety anyway), it’s time to improve yourself and be a responsible driver.
  • Compare across insurers and be aware that insurers may reduce a product’s coverage and features to lessen the premium price. A lower premium may attract you at first, but you might regret it when you get into an accident and find that parts of the damages are not covered under your policy.

If you aren’t sure on what to compare when buying a motor insurance policy, here are some of the things that you need to take note of and consider:

a) The quality of their customer service.
b) The ease of making a claim.
c) The speed of their claims process.
d) Whether the level and type of coverage is sufficient for your needs.

These tips will help you to shortlist the insurers that you can consider purchasing from after the de-tariffication. You should also compare the products from reputable insurance providers that are recognised by Malaysians, such as RHB Insurance Motor Insurance.

What are your thoughts on the de-tariffication? Do you think it will benefit you as a consumer? What other ways can you do to lower your premium after it takes effect? Share your opinions and tips in the comment section below!


Agree or disagree with this post? Questions? You also have your word!

  • debtdash

    to register the vehicle owner under the lowest risk person in your family then to buy insurance for all vehicles under his/her name

    • iza

      insured name should be as per registered in registration card.

      • faisal shah mohamed shah

        insurance companies are not stupid. if the vehicle is registered to your 70-year old dad but is driven by your 21-year old sun 90% of the time then they may not even pay out for false information.

        • Jel45

          different insurance will come out with different premium and coverage. thinking of that will not benefiting the customers so much neither the insurance companies themselves . as we all know people at our country love the lowest cost possible but demand the highest quality in product and service. we can call it as our nature. they will not gonna buy the idea "you will get what you pay"

          insurance companies will slash the premium to win the customer. customer will take the cheapest offer. that is the rules been proven so far here.
          "Countries like Germany, China, USA, UK, and Singapore have beat us to it by years. So don’t worry, it’s hardly a new concept"
          i am worry.

          what will happen when the time they need to coverage most?
          -Low premium will comes with low budget to cover up the vehicles. low budget will lead to low quality spare parts and services. Agree?

          take this as the scenario. accident normally will involve two parties. let say A and B involve in the accident.
          A- customer who is willing to pay for reasonable and high price to cover for his vehicle
          B- customer who is leaving with 24/7 budget rice that is not affort to pay for "more"

          A bang B.. no issues as the A insurance company will pay as what he willing and agree to pay for a higher premium

          but when it comes to .......

          B bang A.. will the B insurance company happily pay to A the lost for his vehicle as what A want it to be as he agreed to pay the higher premium?

          No will be the answer however the smart answer will be "the B insurance will cover for the A losses first before they consider to pay the balance budget to B.

          as what i said before <we can call it as our nature. they will not gonna buy the idea "you will get what you pay"> earlier, i pretty much can conclude what will happen for the next next coming years.

          insurance companies will getting more struggles and stress to work with small budgets as the customer will definitely consider for the lowest premium during the renewal. does this sounds really good?