Everything You Need to Know About the Detariffication in Malaysia

September 16, 2018 | Author: | Posted in Insurance

Recently, Malaysia was in news for phased liberalisation of motor and fire insurance. The phased liberalisation is also known as detariffication or simply put, the act of removing all regulations on pricing of the insurance cover which was previously created by Bank Negara Malaysia. For 30 years, the motor insurance premium in Malaysia had been standardised and followed a tariff structure, which was monitored by the Bank Negara Malaysia.

With the introduction of the detariffication in Malaysia, each company will be able to set their own prices for the insurance covers offered. There is a new risk-based approach which determines the calculation for motor insurance premium. The higher the risk of accident, the higher the insurance premium set.

How does the new premium calculation go?

To get into the details, first you will need to know some of the factors that affect the calculation. The motor insurance can be determined through 2 key factors:

1. The value of the vehicle- also known as sum insured
2. The size/ power of the engine- measured in cc

Other factors taken into account for the new premium calculation include:

– Loading: This is an additional cost imposed when the risk of insurance is increased for various reasons, such as the age of the vehicle exceeding 10 years, and can be as much as 15% of the premium.

– Packaging: Other add-on products or services which insurance companies have ‘packaged’ into the main policy.

– Sum insured: The sum insured is variable as different agents and insurance companies will value your car differently. This factor may also get impacted when you try to get a personal accidental cover added to your motor insurance plan.

With the introduction of the new liberalisations, a new factor has been added to the previous calculation to better assess overall risk, the driver. The new equation therefore becomes:

Car insurance premium= vehicle insured + driver risk

The following risk factors are considered when calculating the premium for car insurance in Malaysia:

1. Age of the driver– A younger driver may be charged a higher premium than an experienced one as young drivers are more prone to accidents due to lack of driving practice.
2. Gender of the driver– A male driver may be required to pay a higher premium than a female as female drivers are thought to be more careful and cautious when driving.
3. Occupation/ Education– The higher one’s education level, the cheaper the premium rate.
4. Residence – Premium rates will be higher if the driver lives in a high-traffic or high-crime area.
5. Claim history – Premium charged is usually higher if the driver has already made numerous claims in the past.

The need for detariffication

The detariffication in Malaysia was much needed as it’s a fairer system for all the drivers. Accidents happen because one of the drivers was careless; it was unfortunate for everyone as they were asked to pay the same premium. Now, careful drivers can enjoy cheaper premium rates and drive care-free in Malaysia.

Explore the web for more information and suggestions on how to choose the best car insurance in Malaysia.

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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 detariffication in Malaysia which can help you in choosing the best motor insurance plans.

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

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