KUALA LUMPUR: Bank Negara Malaysia (BNM) is liberalising the motor insurance industry further as it is enabling pricing of motor insurance products to be determined by individual insurers and takaful operators.
This means that effective July 1, the pricing of motor insurance products will no longer be based on a set fixed price list.
BNM Assistant Governor Jessica Chew said insurers and takaful operators are now able to charge premiums that are in line with broader risk factors inherent in a group of policyholders being insured; and also sell new products that are not defined under the tariff.
"Effective July 1, 2017, under the liberalised environment, more risk factors will be taken into account in determining premiums.
"Other than the sum insured, cubic capacity of the vehicle engine, age of vehicle and age of the driver, premiums may be driven by other factors.
"These factors could be safety and security features in the vehicle, the duration that the vehicle is on the road, geographical location of the vehicle (in areas with higher incidents of theft) and traffic offences on record," she told a media briefing here.
The first phase of the liberalisation of the motor and fire tariff was introduced on July 1, 2016.
During this initial phase, insurers and takaful operators were given the flexibility to offer new motorcycle products and add-on covers that were not defined under the existing tariff.
Prior to 2016, all available products which were defined in the motor and fire tariffs, were subject to tariff rates.
Chew said consumers, on the other hand, will now be able to enjoy a wider choice of motor insurance products at competitive prices as liberalisation encourages innovation and competition among insurers and takaful operators.