Wednesday, November 18, 2009

PM: Only MMIP interested in underwriting risks

Source: http://thestar.com.my/news/story.asp?file=/2009/11/17/parliament/5122340&sec=parliament
AT THE DEWAN RAKYAT (Reports by LEE YUK PENG, ZULKIFLI ABD RAHMAN, LOH FOON FONG AND TEH ENG HOCK. 17/11/2009)
Owners of vehicles that are aged more than 10 years could only get motor insurance through the Malaysian Motor Insurance Pool (MMIP) because other insurers were not interested in underwriting the risks, said Prime Minister Datuk Seri Najib Tun Razak. “In general, insurance companies were more cautious about offering insurance protection especially on third party coverage to certain vehicles such as those more than 10- years-old because the losses were great,” he said in a written reply to Lim Lip Eng (DAP-Segambut).
Lim had asked about steps taken to resolve issues relating to vehicle owners who could not buy insurance for their vehicles, which were older than 10 years, except through the MMIP at the post-office and at a higher premium.
Najib, who is also Finance Minister, said Pos Malaysia like other motor insurance, could only offer motor insurance coverage based on the underwriting strategy of the insurers. The high underwriters’ losses were also due to motor insurance premiums that were hinged on the motor tariff that had not been examined since it was introduced in 1978, he added. He said although the underwriters were given the flexibility to impose additional premiums or loading based on the limit defined by Bank Negara since 1996, it was still not adequate in bearing current business cost since the amount of claims were getting higher.
Najib also said that MMIP was set up as a last-resort insurer to ensure vehicle owners get insured and this was the reason why they were allowed to impose higher premium to balance out the risk.
He also said the Government was considering a suggestion on a basic protection framework for motor insurance that would consider the consumers and the industry’s interests to ensure that the insurance services would continue to be available.

1 comment:

B T said...

Najib did not tell the whole truth. MMIP was allowed to increase the premium by up to 3 times the premium that these motorists were paying before. This will directly affect most of the lower income group as these are the people who cannot afford to buy new cars!
In addition, most of the transport companies will also be affected as most of their lorries are more than 10 years old. The increase premium will be pass on to the consumers in the long run. Again this will have an impact on the lower income group.
In the present economic condition, the lower income group has been hit the hardest. The imposition of this rule will bring more hardship to this group of people.
Finally, who are the people behind MMIP? If the other insurers are reluctant to take up such insurance policy, have they been given the same opportunity as MMIP to increase the premium? Why create a monopolistic situation whereby others are not allowed to compete at the expense of the consumers?