Malaysian insurers should brace for short-term pain

Insurance discounts will reap future benefits, despite negatively affecting present income, says executive

Malaysian insurers should brace for short-term pain

Insurance News

By Gabriel Olano

Providing motor insurance discounts for drivers with clean records may hurt Malaysian general insurers in the short term, but it will bring long-term benefits, according to a senior industry figure.

General Insurance Association of Malaysia (PIAM) chairman Antony Lee said that while implementing the discounts may lower many insurers’ premium incomes, it is for the good of the industry as a whole.

“However, once the desired outcome of encouraging good and responsible driving behaviour is achieved, there will be an overall reduction in motor claims which will benefit the insurance companies,” Lee told The Star.

“This will create a win-win situation for both the motorist and the insurance industry.”

Lee, who is also AIG Malaysia’s CEO, agreed with the Transport Ministry’s plan to give drivers with no demerit points on their licence discounts on their insurance premiums. This will promote safer driving in the long term, he said, adding that the demerit system rewards good behaviour and penalises poor driving.

“This means that a good driver should pay lesser premium compared to another driver who is more likely to be involved in road accidents,” he said.

According to Lee, Malaysia’s motor insurers pay MYR14.8 million (US$ 3.56 million) in claims daily for property damage, bodily injury and vehicle theft. Malaysia has one of the highest road accident and fatality rates in the region, as evidenced by the high payout rates.

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