In our never ending pursuit in consumer education about insurance, iBanding’s Co-Founder and CEO, Mr Luke Roho has been invited as a guest writer to shed some lights on how to best take advantage of motor detariffication on a local esteem publication, Focus Malaysia this week.

Focus Malaysia: Use Motor Detariffication to Your Advantage

About Focus Malaysia:

The post Focus Malaysia: Use Motor Detariffication to Your Advantage appeared first on iBanding Making better decisions.

This change happened on the 1st of July 2017, where the detariffication or liberalisation of motor insurance took place for the whole of Malaysia. It is not something that happened overnight, so if you’re hearing this for the first time, you have a lot of catching up to do!

Scroll down or click here for easy to follow infographic if you’re not a fan of reading.

Prior to this change (and for the past 30 years or so), the price of car insurance followed a strict tariff structure provided by BNM. So irregardless of which insurance or takaful company you bought your insurance from, the price had always been pretty similar (with some minor differences due to other factors). Two main factors that determined the price of insurance were: vehicle engine and sum insured (either based on agreed or market value).

The Malaysian Guide to save on car insurance

Factors determining the price of car insurance today

Oh how things have changed! Today the price of your insurance is calculated based on all sorts of factors! For instance:

The vehicle itself – vehicle age, engine size, car model theft rate, safety features;

The driver/ car owner – years of driving experience, occupation, marital status, history of traffic violations and insurance claims etc.

Here at iBanding, we’ve touched on this subject extensively and many times over. So this time we shall look at this topic from a different angle – how your driving behaviour affects the price you pay for your car insurance.

Infographic: High Risk Driver vs. Low Risk Driver

Detailed explanation below.

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</p><br /><br /><br /> <p><strong>Source https://www.ibanding.my</strong></p><br /><br /><br /> <p><a href=’https://ibanding.com.my/what-type-driver-are-you-car-insurance-price-depends-on-it/’><img src=’https://ibanding.com.my/wp-content/uploads/2017/10/Insurance-Cost-depends-on-your-driving-behaviour-EN.png’ alt=’Insurance Cost depends on your driving behaviour – Infographic’ width=’500px’ border=’0′ /></a></p><br /><br /><br /> <p>

How you drive = how much you pay for your insurance!

The price of your car insurance is largely determined by your risk profile as a driver and car owner. In a nutshell…

High risk driver = Higher car insurance price

Low risk driver = Lower car insurance price

1. The Careful Driver vs The Reckless Driver

The careful driver is always alert while on the road and is considerate. To the careful driver, his safety and the safety of his passengers as well as other road users is of utmost priority and importance.

With this attitude, he takes traffic regulations seriously. He has a very slim chance of getting involved in accidents. And when he does, it’s not his fault. Therefore he probably has never made any claim against his insurance policy.

The reckless driver is the complete opposite. They are inconsiderate, they road rage, are ill-tempered and they completely disregard the safety and well-being of other road users, or that of their own for that matter. Being Malaysians, like it or not, we all have seen them in action on the road.

Their careless and reckless behaviour often result in a higher number of road accidents to their names. This also leads to more number of motor insurance claims against their insurance policies.

2. The Traffic Observer vs The Traffic Violator

A driver who abides by traffic rules naturally is a careful driver. They take rules seriously and therefore may have very few traffic violations or none at all. They don’t drive above speed limit, don’t overtake at double-lines and they use their indicators when making a turn.

Needless to say, a traffic violator takes traffic rules lightly. They do no necessarily care about the safety of others or that of their own. Speeding, using mobile phone without a hand-free kit while driving, overtaking dangerous and recklessly and running red lights. Naturally, these drivers are no strangers to speeding tickets and other types of ‘samans’.

3. The Vigilant Driver vs The Incautious Driver

We are looking at this from the aspect of car safety and not from the aspect of driving behaviour. The vigilant driver always ensures that his car is safe. They install sufficient safety devices and features and make sure to always leave their cars at safe locations. But that is not all. They also ensure that they send their cars for checkups and maintenance on a regular basis.

The incautious drivers do the total opposite. They do not give any attention to the safety of their cars. They leave their cars in areas with high crime rates. They don’t install additional safety features and they don’t carry out regular maintenance to ensures the safety and security of their cars.

Your role as a car owner and driver

No doubt our responsibility as car owners and drivers is to ensure the safety of other road users as well as our own. However with liberalisation of motor detariffication, we may have just gained one more responsibility.

The price of our car insurance now depends on our behaviour as owner and driver. High or low, cheap or expensive, we can more or less decide it on our own.

If you are looking for an experienced and knowledgeable insurance agent to renew your motor insurance, you can easily find one on our directory.

The post What Type of Driver Are You? Your Car Insurance Price Depends On It! appeared first on iBanding Making better decisions.

This time we are testing the following 7 companies to compare the premium for comprehensive motor insurance:=

• Takaful Ikhlas
• Syarikat Takaful Malaysia
• Berjaya Sompo
• Etiqa Insurance
• AmGeneral & Kurnia
• AXA Affin
• Liberty

We obtained insurance quotations from the companies’ websites. The following information is required in order to get the quotation:

• IC number
• Car Model and Make
• Year of Make
• Car Registration Number
• No Claims Discount (NCD)
• Car Registration number

NCD can be obtained from MyCarInfo here

The comparison

We compared comprehensive motor insurance for a 2013 Peugeot, model 208 with NCD of 55%. The owner of the car is a 41-year-old male. According to MyCarInfo the market value of the car is currently RM 38,200. This is important because the market value will be used as the Sum Insured (rounded up to the nearest 1000th) for the insurance plan.

The following table shows the proposed Sum Insured and the respective premium for each insurance company.

*Sum insured is higher

Findings

Our findings above are different from two months ago where all 6 companies compared (exclude Liberty) had the same premium. Because the study we did was only a few weeks after the implementation of motor detariffication, it was safe to presume that the companies had not adopted a new way of premium calculation.

However, this time around, it is clear that some of these companies have already started to determine their own insurance price. Notable differences can be observed for the premium by Syarikat Takaful, which is the lowest among the 7 companies. As expected, Etiqa and AmGeneral are higher because the sum insured is higher.

Based on the above prices by 7 companies, you can save up to approximately 24% on your insurance price (which can be done through iBanding motor renewal), by switching from the highest to the lowest (do note again the difference in sum insured).

Why is Sum Insured important?

The proposed sum insured in the table above is the value that each insurance company automatically suggests when a quotation request is made. It is surprising to see that Etiqa and AmGeneral/ Kurnia proposed a different sum insured for our sample car. Etiqa is particularly high with RM 46,000 compared to the RM 39,000 that MyCarInfo.com and the other 5 insurance companies proposed.

The higher the sum insured – the higher the premium. This is because the sum insured is one of the key factors in setting the price for insurance. This makes sense because a car that is more expensive will have higher repair costs during an accident, so insurance companies charge a higher price.

Conclusions

In our review above, insurance companies are now determining their own insurance price. The price difference is between the expected range of 10% that is allowed by Bank Negara. It is important to compare prices as some companies may increase their prices while others may lower theirs. To ensure that you are getting the product that you need at the best price, it is wise to compare the prices of at least several companies.

To understand more about detariffication, click this link.

The following snapshots are pictures of quotations from the individual insurance companies

Takaful Ikhlas

Syarikat Takaful Malaysia

Berjaya Sompo

Etiqa Insurance

AmGeneral & Kurnia

AXA Affin

The post Be Smart. Compare and Save Up To 24% on Your Motor Insurance Price 2017 appeared first on iBanding Making better decisions.

With the newly introduced motor detariffication (where premium is no longer solely determined by vehicle sum insured and engine capacity but also by the risk profile of the individual driver), it now has become even more important for Malaysians to compare car insurance prices. For this reason, we at iBanding decided to carry out a car insurance comparison by 6 companies in Malaysia via their online insurance portals.

iBanding recently was lucky enough to have a member in its team whose motor insurance policy was nearing its expiry date. We quickly took this opportunity to see how far motor detariffication in Malaysia has changed the renewing process as well as the premium charged by different companies. We also wanted to find out which company is providing the cheapest car insurance.

 

Click to view the Ultimate Guide to Buy Car Insurance Online

Car Insurance Comparison

*6 car insurance companies compared*
We decided to check the premium offered by these 6 car insurance companies via their online insurance portals:

1. Syarikat Takaful Malaysia
2. Takaful Ikhlas
3. Berjaya Sompo
4. AXA Affin
5. Etiqa Insurance
6. AmGeneral / Kurnia

 

The case study

For the purpose of this study, we will be using the following information to find out how much will a comprehensive policy will cost us.

• IC number : ~
• Model : MYVI SE ZHS
• Make and Year : 2014
• Gender: Male
• Marital status : Single
• Hire Purchase Company : ~
• Vehicle number: ~
• NCD: 30%
• Type of policy: Comprehensive cover
  

With all this information in hand, we proceeded to check the car’s current market price on MyCarInfo which came up to RM29,000.

 

Required information:

We noticed that several information that was not required before the implementation of motor detariffication is now being asked on the companies’ websites. The table below shows the information required by each company.

Legend
X – Info required

Insurance Co.	Etiqa	Sykt Takaful	Berjaya Sompo	AXA Affin	Takaful Ikhlas	AmGeneral / Kurnia
Occupation	X		X	X	X	X
Garage		X	X	X	X	X
Safety Features		X	X	X	X	X
Anti-Theft		X	X	X	X	X
Import type		X	X	X	X
Driving Experience	X			X	X
Number of Fault Claim	X			X	X
Major Traffic Conviction	X		X	X
Previous Insurer	X		X		X
Variant	X					X
Type of Driving License	X			X
Purpose of insurance				X
Registration card number		X				X
Engine Number		X	X
Chassis		X			X
Number of info required	7	7	8	10	9	6

 

Descriptions:
Safety features: Includes any feature/ technology assisting in the prevention of car crash. Example: Airbags, anti-lock brakes (ABS), traction control, electronic stability control, safety-belt feature, accident avoidance systems, tire-pressure monitors, telematics.

Anti-Theft: Any device used to prevent or detect unauthorized access to the car. Example: Gearshift locks, ignition/ steering wheel column and crook locks, gear shifter locks and brake pedal locks.

 

The Verdict: Premium comparison

The following table shows premium we received from the 6 companies:

Insurance Co.	Etiqa	Sykt Takaful	Berjaya Sompo	AXA Affin	Takaful Ikhlas	AmGeneral / Kurnia
Sum Insured	Not obtainable	RM 29,000	RM 29,000	RM 29,000	RM 29,000	RM 32,000
Premium	Not obtainable	RM 1001.8	RM 1,101.98	RM 1,001.80	RM 1,001.80	RM 1187.78

 

The outcome, although expected, was still a little surprising to all of us. Despite knowing that immediate, drastic changes were unlikely, we did not expect to see that there were no difference in prices among the companies. The only oddball being AmGeneral / Kurnia that was due to the higher sum insured, which we were unable to adjust.

To read about the experience we had in getting these prices from all the six companies, please go to the end of this article. 

 

Conclusions

The second phase of motor detariffication allows insurance companies to set their own prices for products offered. It is perhaps too early to assess the impact of detariffication as insurance companies are taking a cautious approach in adjusting their prices while keeping a close eye on the competitors. 

It is a crucial time for the insurance companies. Careful planning in pricing strategy is required to ensure their profitability and market share are not significantly impacted by this change.

The impact of motor detariffication is minimal, but customers will eventually feel the change and will compare car insurance plans more often. Insurance companies are already introducing new and innovative products to put themselves ahead of the competition. Such as the AXA FlexiDrive launched in July that saw the first telematics insurance being introduced in the country.

Consumers need to prepare for the shift that is taking place in the motor insurance industry. An unconcerned and apathetic attitude towards it may result not only in higher premium but also unnecessary purchase of add-ons bundled in the policy. Consumers should know the impact their risk profiles have on their insurance premium, as well as a clear understanding of the product that they need.

To read more about motor detariffication and how it will affect you, please click here.

 

Comparing User Experience

 

Below you will find our experience for the 6 different insurance companies. Note that renewal is done via each company’s online portal.

1. Etiqa

Etiqa first asked for basic information as you can see from the picture below. As soon as we clicked “get a quote”, we were required to provide more detailed information. One notable experience with Etiqa is that they do not ask for the availability of a garage, safety features and anti-theft systems. However, there  were several questions required by Etiqa that were requested by only one other company, such as car variant, type of driving license and registration card number.

The premium by Etiqa could not be obtained as we received the following error message: “NCD confirmation is unavailable as confirmation already been taken earlier. Make sure no duplicate confirmation request, if not the confirmation already taken by another insurance / Takaful company”. With this error, we could not continue any further with the renewal process. Due to this error, we had to minus 1 star from our 5 star user experience rating.

First screen when buying insurance

Total information required: 7
Overall user experience: 

(4 out of 5 stars)

 

2. Syarikat Takaful Malaysia

Requesting for a quotation from Syarikat Takaful Malaysia was a breeze as they have their own fast and easy to use online system. Users can get the quotation right off the bat, as shown in screenshot below.

Takaful Malaysia does not request for occupation, driving experience, traffic conviction, and all the information associated with the new risk profile after the implementation of detariffication.

Screen when buying motor insurance from Syarikat Takaful

 

Total information required: 7
Overall user experience:

(5 out of 5 stars)

 

3. Berjaya Sompo

Renewing motor policy through Berjaya Sompo’s online platform was a tiring process. We had to key in all the information required manually. Berjaya requires you to answer 8 questions in total.

 

First screen when buying motor insurance from Berjaya Sompo

 

Total information required: 8
Overall user experience:

(3 out of 5 stars)

4. AXA Affin

Axa Affin’s process to buy insurance looked very simple. With a few information, you can already get a quotation. But here is the catch, the price shown is not really the price you might be paying for. When you decide to actually buy, you are asked for more information and are shown the final price. Compared to other insurance companies Axa Affin asked for the most number of information from buyers. The process is quite long and tedious. Especially if you do not have the information at hand.

 

First screen when you buy motor insurance from Axa Affin

 

Total information required: 10
Overall user experience:

(2 out of 5 stars)

 

5. Takaful Ikhlas

The process to renew our policy with Takaful Ikhlas is more or less the same as the process we went through with Berjaya Sompo. This is due to the fact that they are actually using the same online platform.

Takaful Ikhlas asks for chassis number, unlike four other companies. Generally, the process is cumbersome and tiring.

Here an overview of the steps needed to buy insurance from Takaful Ikhlas

Total information required: 9
Overall user experience:

(3 out of 5 stars)

 

6. AmGeneral/Kurnia

The renewing process with AmGeneral/Kurnia was a simple one. AmGeneral/Kurnia asked for the least number of information. Only 6 information was required because most information is retrieved automatically based on the vehicle number. However, we did encounter an error message saying  “Could not complete the request. Please retry, reason undefined”.

This error caused us to redo everything.

We checked that no information provided was erroneous and tried again and it worked. -1 star for the error, because we had to repeat the process again.

Another downside is that we were not able to adjust the sum insured. For that missing functionality -1 star.

First screen when you buy motor insurance from AmGeneral / Kurnia

 

Total information required: 6
Overall user experience: 

(3 out of 5 stars)

 

What are your experiences? Have you tried to compare car insurance prices before and did you find our car insurance comparison guide to be useful?

The post Compare Car Insurance Prices in Malaysia After Detariffication appeared first on iBanding Making better decisions.

The Malaysian Transport Ministry is studying the possibility of implementing a flexible road tax payment system that will be calculated based on vehicle conditions, mileage and drivers’ traffic offences, according to a report by The Malay Mail.

“This flexible road tax payment system is an incentive from the government to prudent drivers to reduce their road tax rates. With the advancement of technology, we can now know their mileage, so the lower the mileage the lower the road tax rates,” said Transport Minister, Datuk Seri Liow Tiong Lai.

This effort is in line with the recently implemented phased liberalisation of motor insurance, also known as detariffication that aims to, among others, promote fair premium rates based on the risk profile of policyholders.

However, Datuk Seri Liow did not offer any more detail on the system or when Malaysians can expect it to be implemented.

To know more about second phased of motor detariffication that was launched on July 1st, go here.

The post Lower road tax charges for prudent drivers? Government to study soon appeared first on iBanding Making better decisions.

Phased Liberalisation of Motor and Fire Tariffs – Know these 7 things:

1. What it means – Phased liberalisation of motor and fire tariffs is also known as de-tariffication of motor and fire insurance. It means that the regulating body (in this case, Bank Negara Malaysia) will no longer tariff the pricing of motor and fire insurance. Insurance and Takaful companies in Malaysia will be able to determine their own methods in deciding each motor and fire insurance policy they sell.

2. Implementation dates – Phased liberalisation is carried out in two phases. Phased 1 took place on 1 July 2016 where insurance companies were allowed to introduce tariff-free insurance products to the market. Phase 2, which will be implemented on 1 July 2017, is when we will be expecting to feel the direct impact where prices of motor insurance will no longer be the same. However, Third Party cover will not be experiencing any immediate changes.

3. Why – The change is deemed necessary as cost especially for Third Party policy has become too high for the insurance and Takaful companies where the actual pay-out for claims is between RM 1.30 – RM 3.00 for every RM1.00 premium received. De-tariffication is also introduce fairer pricing where safe drivers will pay lower premium than riskier drivers will. This is not something unique to Malaysia, in fact many countries all over the world have been practising it for many years.

4. Pricing – Motor insurance premium under phased liberalisation will take into consideration the risk profile of the policyholder. Unlike the current practice where sum insured and vehicle engine size (cubic capacity) being the only factors determining the price of motor insurance. Because the price was tariffed (controlled), the premium we pay for our motor insurance has been the same (or almost the same) no matter which company we buy our policy from.

5. Premium calculation based on risk profile – Risk profile of policyholder means how likely the policyholder will be making a claim against his insurance and how big the claim amount will be. Factors that will determine one’s risk profile includes: Gender, driving experience, claims history, location of residence, occupation, vehicle type and model, use of vehicle, vehicle mileage and history of traffic offences. Under phased liberalisation, insurance companies will look at each policyholder’s risk profile to decide on the premium. Higher risk equal higher premium. Lower risk means lower premium.

6. What to expect – Aside from the obvious change in premium, expect fierce competition among the insurers. Insurers will compete in several ways to win over customers including introduction of a variety of innovative products, improve in service and professionalism and most importantly – price!

7. The role of the consumer – Consumers are mainly concern about price they pay for their premium, the service provided by the insurance companies, the policy coverage and its benefits. With the price difference that insurers will start to impose and the variety of new products they will be introducing, it is best for consumers to shop around before buying a policy. Consumers should compare products and prices offered by several companies to find the most suitable one. Call up several insurance agents to help you find what you need and do so ahead of your policy expiry date.

Here’s a video you you might find interesting.

Want to know more in depth about phased liberalisation of motor and fire tariffs? Go HERE and you will find lots more interesting information including videos.

Find out who are Malaysia’s favorite motor insurance companies as voted by consumers 2016.

The post Phased Liberalisation of Motor and Fire Tariffs – 7 Things Malaysians Need to Know appeared first on iBanding Making better decisions.

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</p> <p><strong>Source https://www.ibanding.my</strong></p> <p><a href='https://ibanding.com.my/detariffication-of-motor-insurance-in-malaysia-infographic/'><img src='https://ibanding.com.my/wp-content/uploads/2017/01/All-you-need-to-know-about-Detariffication.jpg' alt='Detariffication In Malaysia' width='500px' border='0' /></a></p> <p>
 

Current system

All this time, motor insurance premium in Malaysia follows a tariff structure and has been controlled by the government, Bank Negara Malaysia to be specific. The method of calculation is based on the 2 main factors, which are:

1. Market value of the vehicle
2. Vehicle engine capacity in CC

Additionally, there could be other factors that may affect the premium cost, these are:

1. Packaging – this includes additional insurance products that the insurance company ‘package’ together with the primary motor policy, such as Personal Accident;
2. Loading – this includes all additional costs imposed by the insurance company on certain conditions perceived to carry higher risks, such as vehicle older than 10 years old.

Because the method of calculation is the same across all insurance companies and is according to the vehicle you drive, the premium you pay is similar no matter which insurance company you buy from, with a small difference sometimes. This difference is mainly due to:

1. Sum insured – different companies may value vehicle differently
2. Packaging – different companies may have different additional products and/ or services packaged in their main motor policy
3. Loading – different companies may have different loading conditions

How De-tarification will change things in July 2017

De-tariffication = removing tariff. Bank Negara will no longer control motor insurance premium or the method of its calculation under de-tariffication. This means that insurance companies will be free to use their own methods to calculate premium. Under de-tariffication, insurance companies will implement risk-based pricing method. This means that in determining premium price, insurance companies will be considering several risk factors. They will no longer rely only on your vehicle (I.e. market value and engine capacity) to calculate premium, but also the driver himself. This isn’t a new concept, in fact, it is a normal practice in countries such as the USA, Germany, UK, China and Singapore.

To the consumer, several things can be expected from this change:

1. Cheaper insurance – because prices will no longer be similar across insurers, consumer will start to look around for company that can offer cheapest premium. To be competitive, it is expected that insurance companies will start to lower their premium prices.
2. New products – it is expected that insurance companies will start to introduce more insurance products to the consumer to be competitive.
3. Increased professionalism – in another effort to compete, insurance companies will improve their services offered to the consumer

New premium calculation method – risk-based pricing

To simplify it, premium will now be based on your perceived risk. This means:

The higher risk you carry = the higher your premium price will be.

The lower risk you as the insured is perceived to carry = the lower your premium price will be.

The risk factors include:

1. Age of the driver: Younger driver means less driving experience. Therefore they carry a higher risk.
2. Gender. Female driver have lower risk as they drive more carefully.
3. Occupation/ education. Generally the assumption is that the higher education, better occupation the driver has, the lower are his risks.
4. Claims history. If the driver has had claims before, this could mean that his risk is higher.
5. Type and make of vehicle. High performance cars, expensive and luxurious cars will have higher premium as their risks are also higher.
6. Usage of car. A car used by a mother to send and pick her children from school daily will have lower premium than a car used to commute daily to work in the city.

So what can we do to ensure lower premium?

Here are some good practices to keep your motor insurance premium low:

1. Shop around for the best deal – compare prices among insurance companies to find one that offers the best price along with the best products and service. Shopping for best deal doesn’t necessarily mean cheapest deal!
2. Secure your car – remember, lower risk, lower premium. So do what you can to secure your car. Make sure that the alarms and auto-locks are working. Install a dash-cam if you can afford one. Always park your car at safe location. This will reduce the risk of your car being stolen or damaged during an attempted theft.
3. Think before purchasing a car – before buying a car, check how much will the insurance premium be for the type of car you are considering buying.
4. Drive safely! Lower your risk of getting into an accident. When you have no claim history, your premium will be lower.

Read and understand more about de-tariffication and how it will impact you and don’t stop there. Let everyone you know about it. Be a smart consumer, understand how you can prepare yourself for de-tariffication.

Suggested reading:

https://ibanding.com.my/de-tariffication-are-you-prepared/

https://ibanding.com.my/motor-detariffication-and-how-this-affects-the-price-of-your-motor-insurance/

https://ibanding.com.my/timeline-for-malaysias-motor-detariffication-announced-july-2017

http://www.bnm.gov.my/files/publication/fsps/en/2015/cp02_001_box.pdf

The post All You Need To Know About De-Tariffication of Motor Insurance in Malaysia – Infographic appeared first on iBanding Making better decisions.

What is Motor De-tariffication?

Is the implementation of a risk-based approach in determining the calculation for motor insurance premium. It is being implemented in phases and started in June 2016.

How premium is determined today?

For the past 3 decades, motor insurance premium in Malaysia is controlled by Bank Negara Malaysia based on a tariff structure. To the end consumer like you and I, this means that the price we pay for our motor insurance premium is pretty much the same, no matter which insurance company we buy our motor policy from. This is WHY many of us have never paid attention to which company we buy from. Many of us do not take the time or bother to “shop around” for cheaper price.

What determines premium calculation today:

1. Market value of vehicle
2. Vehicle engine size (cc – cubic centimeters)

A big change is coming and how it will affect us

1. Risk-based premium calculation

The change will be big and it will affect all Malaysians who buy a motor insurance policy. What does risk-based premium calculation mean? It simply means that when determining the price of premium, insurance companies will take into consideration several risk factors, such as:

• Gender of driver
• Age of driver
• Vehicle make and model
• Driver’s place of residence
• Claims history
• Use of vehicle
• Driver’s occupation

The list could be longer and the risk factors may differ from one insurer to another. This means that some insurer may be stricter in determining premium price for their policy while others may be less stringent.

2. Introduction of new products

In the effort to be competitive, insurers are likely to start introducing additional products and/ or add-on covers to the customers. To us consumers, this means more options available to cater for our needs and preferences. However, while these add-on covers are expected to be optional, some companies may include or package them with the basic motor policy.

3. Increase in competition means an increase in professionalism

Knowing that consumers will now have to ‘shop around’ for a company which offers a product and service that suits their needs and budget, insurance companies will need to start competing aggressively among themselves. One way to do this is by offering the end consumer top notch service and professionalism.

But how will this affect premium cost?

This is perhaps what most of us want to know. No one can give a definite answer. However it is good to first understand that one of the reasons why this change is taking place is due to the growing gap between premium collected and claims paid out by the insurers. This has resulted in an unsustainable motor insurance business to the insurers. One thing certain is that premium will now vary among individuals, due to the varying risk factors.

How can we prepare for it?

One thing we shouldn’t do is to wait till one week before the expiry of our motor policy to consider looking for an insurer that offers the right product at the right price for us. Many of us tend to stick to the existing insurer. But with the full implementation of motor de-tariffication, this may no longer be an option. Especially since doing so may cost you a lot of money as oppose to you finding an alternative insurer who offers the same service and coverage at a lower price.

As a preparation, what we can do is to start comparing prices, products, and service level among insurance companies. Some of the factors which we can start to assess are:

• Which companies have a habit of ‘packaging‘ add-on covers with their main policy which may not be necessary to us.
• How much loading (in %) these insurance companies are placing on your premium for additional risks
• Which companies are generally known for professional service. And which are known for unsatisfactory service
• Even more importantly, which companies offer excellent service, in handling issues or a claim 
• Which company pays out the fastest, when you have a claim

This information will help us in shortlisting the insurance companies which we may consider in purchasing our next policy from after the full implementation of motor de-tariffication in June 2017. Hence making it easier for us to do pricing and product comparison.

Annual campaign for the search of Malaysia’s Best Motor Insurance Company

One way iBanding is helping the Malaysian consumers is by offering them a platform where they are able to have their voices heard. Every year, iBanding conducts a survey where the consumers are able to rate their motor insurance company and insurance agent. At the end of the campaign, iBanding will gather all the data and identify the top 3 best insurers. This information helps narrow down the list of insurance companies which we can prioritize in making our comparison. This info will save us time and energy when shopping for the right insurer. As we can safely eliminate insurance companies that have done poorly in the survey.

The participation of the public is crucial in order for all of us to obtain the most accurate, useful and relevant data. So we urge all Malaysian motor policyholders to contribute in this research by answering a few questions concerning your current insurer. Remember, your information will benefit everyone of us!

How you can participate. Click here:

Read more about Malaysia’s Best Motor Insurance survey here.

The post De-tariffication In Malaysia 2017 : How Prepared Are You?  appeared first on iBanding Making better decisions.

PIAM (Persatuan Insurans Am Malaysia) has published additional information on the Detariffication this month for motor insurance and fire insurance. If you do not know about Detariffication, check out our video below covering frequently asked questions about what it is and how it will effect your car or motorcycle insurance.

So, why has nothing changed?

Malaysia’s Detariffication is now also called “Phased Liberalisation” and has officially launched in “phases” this month. This is to emphasize that it will not change in a big bang approach like in India or China, where it had created a lot of problems for the insurance companies there.

Starting from this month onward,  insurance companies are allowed to introduce new products for Motor and Fire insurance. This means that you will start to see new products being introduced under the car and fire insurance in the market very soon. However the existing motor insurance, the prices are still fixed by the government. So when you renew your car policy, you will not see a lot of difference in terms of pricing among the various insurance companies.

Insurance for Third Party will increase

Prices for Motor Comprehensive (MC) and Motor Third Party Fire and Theft (TP&FT) remain the same. Changes will only occur a year after the launch of the first phase, that is around July 2017. However, it is bad news for Third Party policy holders (TP), as the premium prices will start to experience an increase in stages starting this year.

If you are not familiar with the different types of motor insurance policies, below is a quick video explaining this.

You can find the article by PIAM here:  “Top 10 things that you should know about the implementation of phased liberalisation of motor and fire tariffs”

Let’s wait till 2017 for changes

For now nothing has changed in the pricing of motor insurance. Insurance companies are still bound by the fixed prices (tariffs) that are set by the regulator. This is both good and bad news. Good news is that nothing has changed for now. Everything remains as it is. However, for the safe and careful drivers out there, who will benefit most from Motor Detariffication, you will only be able to start saving money from a lower premium rate next year.

The post Motor Detariffication has been launched! Really? appeared first on iBanding Making better decisions.

So here are some FAQ that you may find useful:

1. What is Motor detariffication?

Motor detariffication simply means that insurance companies are free to use their own method to calculate the price for motor insurance, i.e. each insurance company can set their own insurance price.

2. How is it different with the existing method of premium calculation?

Currently, motor insurance in Malaysia is tariffed, this means that it is controlled by Bank Negara.

Insurance companies in Malaysia have to follow BNM’s guide in premium calculation which makes the price by each insurance company the same. To make it easy to understand, this is similar to the petrol price in Malaysia, whichever station you go to, the price of petrol is the same.

With motor detariffication, each insurance company is free to determine the price for their insurance product. Again if we take the price of petrol as an example, this is as though each station that you go to now will charge a different price for petrol.

3. How is premium calculated today?

Today, your vehicle determines the price of your premium. It is calculated using only 2 factors, they are:
a) The value of your vehicle (also known as sum insured)
b) The size of your vehicle’s engine (measured in cc)

4. Why am I getting different prices from insurance companies, even though motor detariffication has not yet been implemented?

There are three main reasons why insurance companies charge different premium prices for the same car: Sum insured, Loading and Packaging:

i) The sum insured is different

Agents and insurance companies can value your car differently. So if company A thinks your car is worth RM 50,000 and company B thinks your car is worth RM 60,000, you get two different insurance prices. The best way is to follow MyCarInfo. We believe it is the most neutral and reliable source.

ii) Insurers place “loading” on your vehicle

Insurance companies have the right to place up to 15% loading on insurance for special cases. Common examples are loading for young drivers or cars that are older than 10 years. In these cases it helps to know someone “important and influential” in the insurance company, because the loading is not the same for all insurance companies.

iii) Packaging or bundling with other products

Insurance companies love to bundle their motor insurance with other products, especially those that bring them a lot of profit. The most common add-on that companies bundle with motor insurance is Personal Accident Insurance.

For instance, Allianz integrate its Road Warrior plan with their Personal Accident Cover (PAC) while Zurich Insurance calls it AutoPAC. So you may think you are only buying Roadside Assistant with your car insurance, but in fact you are buying a second insurance. Insurance companies often make it mandatory for you to purchase this add-on with their motor insurance.

Because of these reasons, it is wise to compare insurance prices from different companies even now as this can help you save.

5. How will it be calculated after the implementation of motor detariffication?

After the implementation of motor detariffication, insurance companies will ask for more information about the driver to set the price. It no longer only takes the vehicle into consideration.

Here are some examples of what insurance companies can ask in addition to find the right price:

a) Age of driver – Rates will be higher for younger drivers as opposed to older ones, because young drivers get into accidents more often

b) Driver’s gender – Rates will be lower for female drivers, because on average they drive more careful and have less accidents

c) Driver’s place of residence – Premium rates will be higher if drivers lives in high traffic and high crime rate areas, because the chance of making a claim is higher

e) Driver’s claim history – Drivers with a bad claims history will be considered as high risk and therefore higher premium will be charged

6. When is the implementation date?

The latest news from Bank Negara plans to implement it in phases.

July 2016 – Insurance providers can start to introduce new non-tariff products and add-on covers.

July 2017 – Starting from this date, insurance prices for motor insurance will no longer follow the tariff structure set by BNM. Insurers will start to charge motor insurance premium according to a set of risk factors.

This means that you will only start seeing changes in your premium price after July 2017.

7. How can this help me save on motor insurance?

If you are considered a ‘safe’ or low-risk driver, your insurance premium could be lower.

8. What can I do before the implementation of motor detariffication?

As a wise consumer, you should start comparing prices and products offered by different insurance companies in order to find out which company can offer a solution that is best for you with the most competitive price.

9. Is motor detariffication good for Malaysia?

Yes, some of the reasons why we believe that this will be a good solution for the country are:

i) This will create a healthy competition among the insurance providers which will result in the introduction of a variety of new products.

ii) Due to competition, this will also result in an improved service offered by the insurance companies where we could see a faster and more efficient claims management process.

iii) We could see the roads becoming safer as people will start driving more carefully to save on the price of their motor insurance.

Want to learn more about Motor Detariffication in Malaysia? We recommend the below sources.

• Tower Watson Article
• The Star article on 13.4.2015
• Investopia definition

The post Motor Detariffication and How this Affects the Price of Your Motor Insurance appeared first on iBanding Making better decisions.