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Phased Liberalisation

WHAT IS THE DIFFERENCE BETWEEN LIBERALISED AND TARIFFED MARKETS?

In a tariffed environment, all motor insurance premiums and motor takaful contributions are regulated/controlled and insurance companies and takaful operators have to follow the prices set in this tariff when offering products. Under a tariffed environment, prices will be the same irrespective which company or takaful operator offers the product. Premiums/takaful contributions are based only on 2 main criteria – engine capacity and sum insured/covered (value of the car).

In a de-tariffed or liberalised environment, all motor insurance premiums and motor takaful contributions will be assessed using a risk assessment method. This simply means lower risk motorists will pay lesser premiums compared to higher risk motorists.

How do we classify high risk motorists? Basically, it is based on:

  • Driving Style - a reckless and impatient driver is more prone to accidents.
  • Driving Habit - a motorist with a high number of traffic summonses, will also be responsible and prone to more accidents.
  • Accident Prone - if you make regular insurance/takaful claims for car repairs, you are deemed an irresponsible driver.

In a liberalised environment, good and careful drivers will no longer be subsiding the costs of bad or reckless drivers.

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