Since 1 July 2017, the motor and fire insurance in Malaysia has experience a phased liberalisation where Tariffs or fixed premium rates that were previously in place will be gradually lifted and consumers will have access to a better range of products at better prices and great service.
Here, Jimmy Tan, Head of Retail Business at Allianz General Insurance Company (Malaysia) Berhad shares what consumers should really know about phased liberalisation of motor and fire insurance.
Seven Things About Phased Liberalised Motor And Fire Insurance
What is phased liberalisation vs full-fledge liberalisation?
In a full-fledge liberalised market, insurers will evolve from rule-based underwriting systems to risk-based decision-making structure. Jimmy said: However, in a phased liberalisation environment, insurance companies can still model their risk-based pricing accordingly.
Premium rates can be capped at +10 percent or -10 percent of the premium that you would have been charged by the same insurer upon renewal. Over time, the cap will gradually increase and eventually be removed completely, thus achieving a fully liberalised motor and fire insurance. Besides that, under the phased liberalisation of the motor insurance, only the Third Party policy will still be subjected to Tariffs or fixed premium pricing.
So what exactly is risk-based pricing?
Basically, insurers can determine the premium you will pay for your policy based on risks. They include anything from gender, occupation, driving experience, car make and model, place of residence and even your claims history. In short, the more positive the risk factors in your profile, the more likely you will enjoy a lower premium.
How exactly will insurers decide on price?
Each insurer will have their own set of risk factors. They will then conduct their own analysis on this set of risk factors to develop their perception of risk and use it to come up with their own risk-based pricing method (or new Tariffs) to calculate premiums for their customers.
As a consumer, should I be worried?
Jimmy said: No, it’s all good news so far. In a liberalised market, consumers should enjoy better priced premiums should they have lower risk profiles.
Taking into consideration how good claims history can affect your premiums could indirectly make you a better driver! Secondly, this will allow for healthy competition among insurers to come up with better priced and real value-added products and this will utmost benefit the customer.
How will I know if I am being priced fairly?
Fret not! Bank Negara Malaysia (BNM) which governs all financial institutions will oversee the application of the new Tariffs.
What does it mean for insurance companies?
It all points to free competition, more product differentiation, fairly-priced premiums and a lot of emphasis on customer satisfaction. Jimmy said: Allianz for one will continue to provide simply the best value for customers through great products at the right price, demonstrate high customer service standards and superior after-sales service.
Take the Allianz Road Rangers that currently services the Klang Valley. The service features seven new touch points, including a 24-hours Accident Call Center, the all-new Allianz Road Rangers fleet of 20 bike brigades and 15 Allianz-branded tow trucks, quick claims process with the Allianz Motor ODX Claims.
What about Allianz General’s customers?
Jimmy said: Consumers must remember that cheap is not always good as you might be short-changing yourself in the long run. Embrace the new changes positively and go for a value and a level of service you are comfortable with.