Understanding the Detariffication of Motor Insurance in Malaysia

Detariffication

Hi Valued Customer, understood that most of you out there had been hearing detariffication of insurances beginning 1st of July 2017.

What do we meant by detariffication ? In simple terms, it actually meant by the insurance premium calculation will now based on a few different factors instead of the previous fixed tariff calculation.

What will happened after 1st of July 2017?

Let’s stand into 3 different shoes to view on what will actually happened:

Industry Views:
1.Price War
2.Compliance Pressure as each Insurance Company needs to develope own in-house pricing capabilities
3.Product Differentiation (Innovation, Branding)
4.Freedom to Price and Design

Customers Views:
1.Lower Pricing – It really depends on the factors that affect the pricing. Not necessary you will be getting it cheap
2.More Choices
3.Better Services in terms of conveniences and respond speed.

Regulator Views:
1.Healthy Competition
2.Premium charged are reflective of the risks.
3.Greater Transparency on how the premium are calculated.

Key Rating Factors in De-Tariffed Market

Below are few of the key rating factors that premium calculation will be based on beginning 1st July 2017:

Driver Related :
-Drivers Age. For example:- Younger People tends to drive faster. Get what i mean?
-Gender. For example:- Does Male drive faster than female?

Vehicle Related:
-Vehicle Age. For Example:- The chances of old vehicle sudden failure in the middle of the road is higher.
-Vehicle Make Branding.
-Risk Type
-Coverage

Territory Related:
– Which state you lives in or mostly travel in? Rural area or city area?

Wrapping Up

This is just the beginning phase of the detariffication. As it goes on, they will be adding more and more factors into account. Just for your information, the fluctuation of the premium will be capped maxed -10% or +10% by Bank Negara Malaysia, so there are no worries that your premium will be extremely cheap or extremely expensive.

 

 

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