14th August 2020 - 3 min read
The General Insurance Association of Malaysia (PIAM) has revealed that despite the significant reduction in traffic nationwide during the overall MCO period, the total motor claims paid out by insurers remained elevated at RM2.4 billion in the first half of 2020 (1H20).
In response to this, PIAM chairman Antony Lee emphasised in a statement that a mindset change is required to transform the driving habits of Malaysian motorists. “High-risk drivers with their dangerous driving behaviour affect public safety in the same way as drink-drive motorists. Their risky and irresponsible driving behaviour should be recognised with higher insurance premiums,” he said.
Lee further added that PIAM will continue to work with the Ministry of Transport, the Road Transport Department (JPJ), the Royal Malaysia Police (PDRM), and other parties to reduce road accidents in the country.
Additionally, PIAM anticipates the full liberalisation of the motor insurance tariff by Bank Negara Malaysia (BNM) so that the industry can adopt a risk-based pricing model for motor insurance premiums. This is in comparison to the conventional pricing model that charges motor insurance premiums based on an individual’s past driving history, make and model of the vehicle, mileage, and vehicle use.
PIAM further highlighted that the number of stolen vehicles has decreased for the seventh year in a row, dropping by 39% from 5,512 to 3,340 vehicles for all classes during 1H20 compared to the same period last year.
In the same statement, PIAM disclosed as well that the general insurance industry faced its steepest half-year drop in recent years, declining 3.6% in its gross direct premiums for 1H20 compared to the same period in 2019. The plummet amounted to RM8.60 billion.
Motor, as the largest class of the general insurance industry, fell a significant 7.4% at RM3.87 billion. This is mainly attributed to the massive slump in automotive demand during 1H20, which saw a decrease of more than 40% in sales.
Meanwhile, personal insurance saw the sharpest plunge of all the classes, stumbling by 13.4% to RM522 million. Marine aviation and transit (MAT) insurance also dipped 0.7% to RM0.80 billion, affected by the 9.0% and 8.7% decline in cargo and offshore oil-related classes, respectively.
Conversely, fire insurance grew by 2.2% to RM1.76 billion, while medical and health insurance climbed up 3% to RM586 million.
Additionally, PIAM also noted the various efforts that its member companies have been proactively doing to lessen the financial burden of their policyholders during this challenging time. These include offering extra coverage for Covid-19 with no increase in premiums, as well as waiving selected exclusions on medical policies that are relevant to the pandemic.
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