Comment by V.K. Chin THE general insurance industry may have a case in asking for an upward revision of its tariff, which was last reviewed 28 years ago. But there is still reluctance on the part of the Government to meet this request. After nearly three decades, many things had taken place in the industry, whose number has been reduced due to takeovers and consolidation of the industry. At the same time, the number of motor vehicles on the road had gone up many times over and the accident and casualty figures had also been going up proportionately. One of the reasons for the sharp jump in the increase of new vehicles was the introduction of the national car, Proton, which made its debut in the early 1980s. The affordable prices of its models had enabled more Malaysians to buy a vehicle and in a very short time, Proton was able to capture a large slice of the local market, which used to be dominated by foreign brands. This development has resulted in the increase in the number of accidents, though motor insurers' revenue had also gone up in tandem. Own damage and third-party claims were not the only liabilities faced by the industry. Added to their woes is the sudden increase in car thefts and models, especially of a few popular ones, which became the favourite targets of syndicates involved in this crime, for sale abroad and even locally. Dozens of cars are reportedly lost every day and the industry claims that its members paid out RM730mil for this purpose last year, which is indeed a lot of money. So far, many of the insurers had settled such claims if nothing unusual was detected. In fact, one particular model was so popular with the thieves that the sales personnel did not seem at all surprised when informed by their victims. The industry seems resigned to such activities and is trying to recover some of its losses by asking for a tariff review. Insurers just do not know how to handle this situation and have to depend on the police and other agencies to deal with this crime. But the Government has always been against any premium revision due to the large number of people affected by such a decision. The Director-General of Insurance would prefer insurers to run a tighter ship and to control their costs and finances more efficiently. Some of them could have lost a bundle due to imprudent investment and mismanagement. Fraud is a big issue due to dishonest agents who issued temporary cover just to enable their clients to renew the road tax. Once this is done, some agents will just pocket the money without forwarding the premium to their principals who will be none the wiser of such dealings until there was a claim. Still with the prices of most things going up, the industry may feel that the time may be right to take up its case and hope that this time around, they will be able to get a positive response from the regulator.
Thanks to: 29 December 2005, By The Star
