Motor insurance/takaful is a compulsory cover by law which vehicle owners are required to purchase to renew their road tax. However, motor insurance/takaful is not solely to allow you to renew your vehicle road tax but also provides you compensation in the event you meet with an accident and also pays for claims submitted by a third party against you in the event you cause bodily injury or property damage to this third party.
Motor insurance/takaful is currently under a tariff which sets premiums/takaful contributions that insurance companies and takaful operators can charge. The motor tariff is regulated and supervised by Bank Negara Malaysia, the regulator of the insurance and takaful industry.
With the phased liberalisation of the motor tariff on 1 July 2017, insurance companies and takaful operators will be given some freedom to price the premiums/takaful contributions. This phased liberalisation will begin for Comprehensive and Third Party Fire and Theft classes. Premiums/takaful contributions to be charged for these classes will be based on the risk profiles of the vehicle owners or the vehicle itself. This will result in an open market with competitive pricing. Consumers will have the freedom to shop around for the best prices based on their individual insurance/takaful needs.
On this point, it should be noted that cheaper premiums/takaful contributions does not mean the best solutions. Consumers must compare the coverage they are given to ensure their risks are fully covered or insured/covered. Thus, consumers will be empowered to make their own choices and have the power to decide on what they want and need. Insurance companies and takaful operators will also be allowed to offer additional products attached to the Motor policies/takaful certificates for consumers to pick and choose what they want from the array of new products.
If you are a careful driver, under the tariffed environment, you may have been paying a premium/takaful contribution which is higher than your risk profile. Under the liberalised environment, if your risk profile is good, you will be able to enjoy lower premiums/takaful contributions. While this is subject to the assessment of your insurance company and takaful operator, fairer pricing will benefit consumers.