What do you know about detariffication?
For the past 3 decades, motor insurance premium is regulated by a tariff structure and it’s controlled by Bank Negara Malaysia. Beginning 1st July 2017, motor insurance in Malaysia will be de-tariffed which accounts 46.2% of the total general insurance market in 2016.
- What does detariffication mean?
It means removing the traffic structure that allow insurance companies to charge premiums based on the risk behaviour of the consumer.
- What would determine a car insurance premium when detariffication occurs?
Risk-Based Pricing system will be implemented by all insurance companies. The system does not based on the CC of your car but other factors such as gender, driver’s age, usage of car. claims experience, occupation, vehicle model etc. The higher the risk a driver will get into an accident, the higher the premium will be and vice versa.
- How will it be implemented?
Detariffication will be implemented gradually, this is BNM’s effort to ensure the consumers will not be shocked by substantial high premium rates. Here’s the simplified phases:
- 1 July 2016: First phase where insurers will be able to offer new products to consumers at a tariff rates. Existing Motor insurance premiums & coverages remain the same.
- 1 July 2017: Second phase where the premium rates for Motor Comprehensive and Motor Third Party Fire and Theft plans will be de-tariffed. Pricing of Third Party shall still in accordance to current tariff.
- 2019: The progress on detariffication will be reviewed with an assessment of the impact on consumers and industry before full liberalization takes place.
Side note: Adjustments of tariff made between 2012 to 2015 will face a gradual increase for some vehicle classes. By doing this, drivers will not be shocked by high premium rates if this class goes through detariffication.
- How can we benefit from it?
- Premiums that based on risk of a driver carries. i.e lower risk drivers will enjoy lower premium rates. (so, drive safely on the road to enjoy cheaper rates!)
- Enjoy a wider range of motor insurance offers that customize to your needs
- Easier access to purchase motor insurance policies through your preferred channels
- Where can I get the best car insurance plan?
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Click here for more information on Detariffication in Malaysia.