KUALA LUMPUR: Bank Negara Malaysia and Malaysia Competition Commission are on collision course over the latter's decision against Persatuan Insurans Am Malaysia (Piam) and its 22 members.
The central bank expressed regrets over MyCC's decision to rule out an agreement between Piam and the Federation of Automobile Workshop Owners' Association of Malaysia (FAWOAM) on discount rate for motor parts prices and labour rate for repairs of motor vehicles.
MyCC, in its "final decision" on September 14, found that Piam had infringed Section 4 of the Competition Act 2010 following the agreement.
Besides imposing financial penalties, MyCC also directed Piam and FAWOAM to cease and desist from implementing the agreed parts trade discount and hourly labour rate, and for such discounts and rates to be determined independently by individual insurers and workshops.
"(We) regrets MyCC's decision as the arrangement was put in place through the facilitation and direction of Bank Negara Malaysia to the general insurers to address disputes between workshops and general insurance companies that had adversely impacted consumers," the central bank said in a statement today.
Bank Negara said this was due to protracted delays and disagreements over insurance claims payments for motor repairs.
"The resulting arrangement was implemented after discussions between Piam and the FAWOAM. As a result of Bank Negara's regulatory intervention, delays in settlement of claims arising from motor repairs had reduced significantly and policyholders were better served by a more efficient claims settlement process."
Citing an example, Bank Negara said the average turnaround time from date of notification of an accident to the completion of repair works had reduced by 55 per cent since 2010.
Bank Negara believes MyCC's decision might unravel the positive outcomes from past and ongoing initiatives by the former and the industry to curb fraud and improve efficiency in the motor claims process.
This, in turn, will have wider ramifications for access to and the cost of motor insurance for Malaysian consumers.
Piam, meanwhile, said its members were profoundly disappointed by MyCC's decision and would appeal against the decision.
It said to safeguard the interests of consumers, Piam under the direction of Bank Negara agreed with FAWOAM to resolve the prolonged dispute between insurers and repairers over spare parts trade discounts and labour rates.
"Bank Negara Malaysia's directive was in the interests of the motoring public and addressed consumers' complaints on the motor repair process.
"It also supports ongoing reforms in the motor insurance industry to promote greater competition, innovation and affordability in the long term," it said.
Piam said it had submitted clear and robust evidence to MyCC that the arrangement brought benefits to consumers, in terms of faster turnaround time for repairs, less complaints and growth in the numbers of repairers, and therefore enhancing availability of repairers for accident repairs.
It noted that an independent economist's report by RBB Economics UK had been presented to the commission on two occasions.
The RBB report presented clear and robust tangible evidence of how consumers had benefited from the agreement, it added.
"Piam and the insurers had participated in good faith in the entire process following the proposed decision, on the basis that their evidence and arguments would be thoroughly evaluated and that the final decision would have taken into consideration and properly construed all of the facts, arguments, and evidence that had been presented to MyCC.
"After three years, PIAM is deeply disappointed that MyCC has released a decision that does not fully take into consideration the voluminous evidence tendered and legal arguments submitted.
"MyCC's decision rejects legal and regulatory certainty and is a decision against consumers and the motoring public of Malaysia," it said.