29th December 2022 - 3 min read
The General Insurance Association of Malaysia (PIAM) revealed that the take-up rate of comprehensive motor insurance with flood coverage has more than doubled to 12% in the first half of 2022 (1H22). This is in comparison with the 5% take-up rate that was recorded for the full year of 2021.
In a statement, PIAM said that the improved take-up rate can be attributed to the increased public awareness of damage risk to property and assets due to flash floods. This is especially since the floods in late December 2021 and early January 2022 were reported to have caused an overall loss of RM6.1 billion.
Aside from that, the purchase of fire (material damage) insurance with flood coverage also recorded a slight uptick, from 30% for the full year of 2021 to 31% in 1H22.
PIAM stressed that flood coverage is actually more affordable than the general public thinks, and urged consumers to upgrade their policies if they do not yet have such protection. To better illustrate this point, the association drew a comparison between three types of vehicles – Proton Saga, Toyota Camry, and Mercedez Benz AvantGarde – and found that the additional premium for flood extension coverage ranges only between RM0.08 to RM1.74 per day.
Similarly, flood coverage is not spectacularly expensive for properties either, said PIAM. “The rate for flood extension coverage under a standard tariff policy for risks below RM10 million is 0.086% – an affordable sum given the amount of protection provided for losses resulting from floods. For instance, a property with sum insured of RM200,000 would incur an additional premium of approximately RM172 per annum (RM0.47 per day or RM14 per month),” it shared.
Given these figures, the association urged homeowners to consider purchasing houseowner insurance that also includes householder (home contents) cover. This is because it usually provides protection for flood and various other perils as well.
Finally, PIAM cited a report by national reinsurer, Malaysian Re, which highlights the low insurance penetration among Malaysians despite their increased awareness of flood risk. The report noted that flood coverage is mostly bought only by those who stay in regions that are perceived as flood prone, but with climate change causing havoc, areas that are not considered flood prone, too, may be exposed to unexpected dangers.
“In conclusion, in an effort to safeguard assets against flood, natural disasters and fire damage, Malaysians are strongly encouraged to review their existing insurance coverage to ensure that their needs are adequately met,” PIAM said.
Subscribe to our exclusive weekly newsletter and we’ll bring you the week’s highlights of financial news, expert tips, guides, and the latest credit card and e-wallet deals.
Stay tuned for what’s to come next in the personal finance world