Motor insurance in Malaysia is set for a major revision in 2016 where according to Bank Negara Malaysia, it will be based on a diverse list of risk factors when the industry is de-tariffed. As for now, motor insurance in Malaysia is still in the gradual process of removing the tariff-based system.
So by 2016, motor insurance rates will be based on the various aspects of risk factors – ranging from driver’s profile & personal details, vehicle make, geographical location and claims history. The de-tariffing move would also see those with good claims record enjoying much better premium rates than those with a higher-risk profile.
This means that in the near future, motoring insurance rates will depend on the driver, as such a reckless driver who has a higher risk will be imposed with higher rates of insurance. In a way, it works similarly with medical/life insurance where a higher premium will be imposed should that person be a smoker or has known medical issues from the family’s history.
Motor insurance rates vary from one country to another, where in the UK motoring insurance also based on a risk rating. For instance, insurance rates for performance cars hit the highest insurance group, with buyers need to fork-out more compared to the insurance rate for a supermini. While used cars are indeed cheap, at times the insurance rates are higher than the price of the vehicle, due to variable factors.
Such implementation is applaudable as this will encourage safe driving among Malaysians, and in a way, a careful driver who has avoided any road accidents may get the best premium rates. On a side note, the Goods and Services Tax (GST) is applicable for motoring insurance for next year.
[Source: The Sun]