Since the de-tariffication of the Malaysian motor insurance industry in July 2017, motor owners have enjoyed numerous advantages. If you’re a policyholder, you might have noticed that various insurance companies now have different premium prices hence the need shop around to find out what best suits your needs.
What is de-tariffication?
De-tariffication means allowing insurance companies to work out and set premium prices (liberalization). Previously, the Bank Negara Malaysia calculated a tariff structure that every insurance company in the country had to follow. The bank put two factors into consideration, to determine premium price:
Car engine size
The value of your vehicle
The following are two ways in which car owners are now benefiting from de-tariffication.
Consideration for cars that are less likely to be stolen
In the past, tariffication charged the same premium to different vehicles with the same engine size. Even though the engine size might be the same, some types of car are more at risk of car theft than others. Before de-tariffication, insurance companies paid more than RM 2.8 billion in theft claims, a cost that they passed on to every consumer. Now, your premium price will depend on how much risk your car poses theft-wise.
No Claim Discount (NCD) rewards good drivers
Previously, the tariffs did not recognize law-abiding citizens that followed all the road rules and, therefore, had never made claims against their insurance policies. Now, de-tariffication looks at a policy holder’s driving history and uses it to determine their premium. Drivers with too many accidents pose a more significant risk to an insurance company; hence have to pay more than those with a clean record. Tariffication was unfair to the low risk customers because it did not consider a driver’s risk profile or car model.
For the first time in 30 years, you have some control in limiting the insurance premium you pay by ensuring that you drive safely and don’t commit traffic offenses. Before taking out insurance on your vehicle we recommend comparing the different insurance policies available and choose one that best meets your needs. If you would like help in choosing a policy for your motor then don’t hesitate to contact us today.