Insurance News

Rebates for direct insurance
18 May 2009, By The Star
PETALING JAYA: Come July 1, car owners who buy motor insurance directly from insurance companies without using the services of an agent will qualify for mandatory rebates, a move that could render agents redundant. The move would see new customers being given a 5% rebate on their insurance if they buy it via channels such as the Internet, telemarketing, direct mailing or by walking into the insurance company. These customers would also get a 10% rebate for renewals in the second year. In a circular sent to the General Insurance Association of Malaysia (PIAM) dated April 17, Bank Negara said the rebates would only apply to actual owners of the vehicles. The circular added that Bank Negara had “no objections” to PIAM’s proposal for the mandatory rebates. This is understood to mean that the move would more likely be implemented than not. Veteran insurance agent Hardyal Singh hit out at PIAM, saying the association did not take the views of 40,000 agents (15,000 of them full-time) into consideration. “It will clearly affect the livelihood of the agents. Full-time agents hire at least three to 30 employees at their agencies and these people will also be affected. “Our main source of income is the 10% commission, so the 10% rebate is actually our commission being given to the customer. It offers no benefit to the insurance company but instead creates a socio-economic crisis by making people jobless.” Hardyal, who was formerly Perak General Insurance Agents Association president, said he would be forming an ad hoc committee with some larger agents in Kuala Lumpur to speak out more on the matter. It is understood that the circular was the outcome of correspondence and meetings between PIAM and Bank Negara on the association’s proposals towards self-regulation of the industry. In the circular, the central bank said the rationale for mandatory rebates was to “promote the promulgation of alternative channels of distribution so as to increase the penetration of insurance to the masses”. An industry source said the industry was heavily regulated, especially towards the ability of insurance companies to reward agents, and that PIAM’s proposals were for Bank Negara to allow some self-regulation. “When Bank Negara came back to the table, it seemed that they were saying if insurance companies were willing to reward agents, then they could also provide this benefit to policyholders.” The source added that the central bank’s move could be seen as a way to reduce the number of part-time agents but said full-time agents would now have to work harder and think up new ways to get business. Consumer advocate Billy Toh said he was strongly against the move as he felt that agents could still play a role by explaining the insurance policy details to customers. However, Federation of Malaysian Consumers Association secretary-general Muhammad Sha’ani Abdullah said “the move would reduce the opportunity for agents who try to get customers to buy other types of insurance together with motor insurance.”

Third-party motor cover from MMIP
16 May 2009, By The Star
PETALING JAYA: Members of the public who are unable to get third-party insurance coverage from individual insurance companies are advised to obtain coverage from the Malaysian Motor Insurance Pool (MMIP). MMIP is a pool contributed by all insurance companies and deemed as the insurer of last resort. Recently, there had been reports that motor vehicle owners had experienced some difficulties in obtaining third-party motor vehicle coverage. Deputy Finance Minister Datuk Wira Chor Chee Heung met officials from the Finance Ministry, Bank Negara and representatives from Persatuan Insurans Am Malaysia (PIAM) yesterday to discuss issues regarding motor vehicle insurance, especially the issuance of third-party motor vehicle insurance. In a statement, the ministry said that Chor subsequently instructed Bank Negara to resolve the matter together with PIAM. Chor wants both parties to jointly come up with balanced short and long-term resolutions which would be amicable to all stakeholders, namely insurance companies, consumers and regulators. PIAM said that insurance companies were willing to issue coverage but hefty losses due to large claims from third-party coverage had resulted in it being a non-viable business.

Source:http://www.piam.org.my/news/insnews/ins_news.asp