All You Need to Know about De-tariffication of Motor Insurance in Malaysia

August 11, 2018 | Author: | Posted in Insurance

The detariffication of the motor insurance in Malaysia is also known as the liberalisation of motor insurance tariff which was introduced in the year 2016. Prior to the liberalisation, motor insurance premiums in Malaysia were regulated by a fixed tariff structure and controlled by Bank Negara Malaysia.

The insurance premiums were calculated based on 2 primary factors:

  • Market value of the car, or how much is your car worth today and,
  • Vehicle engine capacity in CC.

Other lesser factors affecting the premium calculation were:

1. Packaging – The other service and products packaged inside the policy

2. Loading – Additional cost imposed by the insurer on conditions such as vehicle more than 10 years old can reach a maximum premium up to 15%.

Since the premium calculation was charged before the de-tariffication in Malaysia, prices were similar between insurance companies with minor differences due to the sum insured, packaging, and loading.

However, the de-tariffication is about changing the face of car insurance Malaysia. After the implementation of the liberalisation, motor insurance premiums are no longer regulated. This allows the insurance companies to use their own methods for calculating the price for motor insurance premium. This method is practiced by several countries across the globe such as USA, Germany, China, Thailand, UK, and Singapore.

How does de-tariffication impacts the consumers?

With the introduction of liberalisation, insurance companies will use risk-based pricing for determining premiums. This way, it’s the individual and not just the car that is taken into account for calculating the premiums. The higher the risk, the higher the premium, a person will be charged for the insurance policy. Each company will have their own way of calculating and the prices offered will be much more different for the same profile.

The factors affecting your risk profile include:

1. Age – younger drivers will be charged higher premiums

2. Gender – Male drivers might pay higher premiums than female drivers

3. Type and make of car – High performance vehicle will be charged a higher premium

4. Occupation – The higher the education, the cheaper the insurance

5. Claims history – If the driver has a claim history, the premiums will be higher

6. Car usage/ mileage – The higher the mileage of car, the higher the premium

What should the consumers do?

– The consumers should compare the prices amongst the insurance companies and shop for the best available deal.

– They need to secure the car as much as possible by installing dash-cams, parking it safe and ensuring that the auto-locks and alarms are working.

– The consumer needs to contemplate before buying a new car about how much insurance premium will cost as sports and high-performance cars will cost you a higher premium.

– They need to drive safely as the premium is affected by the claims made.

Explore the web for more information on impact of phased liberalisation on motor premiums.

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About Author
Robinson James is an automobile marketing professional and he is known for offering free advice on car insurance in Malaysia. He offers honest advice regarding auto insurance and car insurance policies through his blogs. Connect with him to get most astonishing motor vehicle insurance plans at affordable costs. His blogs also share details about latest insurance news and de-tariffication in Malaysia which can help you in choosing the best motor insurance plans without making any additional effort.


PIAM Insurance makes the renewal of your motor & car insurance more reliable and offer the best insurance policy online in Malaysia.

This author has published 14 articles so far.

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