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.