New insurance rules may make the poor poorer

© Provided by MToday News Sdn Bhdcharles-santiago-motor-insuransPETALING JAYA: An MP has voiced concern that the liberalisation of motor insurance, which comes into effect this July, could end up victimising vehicle owners who are poor.

Speaking to FMT, Klang MP Charles Santiago noted that one of the factors determining a premium rate would be the geographical location of a vehicle. Rates can be raised for vehicles located in areas with high incidents of theft.

Santiago said low-cost housing areas were generally more prone to crime, which would mean those living in such areas could end up paying higher premiums.

He said theft was more likely in such areas for various reasons, including the lack of parking spaces, which forced residents to park their cars on the roads.

“So it looks like the risk factor of being poor is high,” he said. “It looks like it has become costly to be poor.

“Over the years, poor public transportation planning has forced many people to buy vehicles, especially the working class, just so they can get to work on time and be mobile.

“Sadly, it seems the extra payment for risk will now come from the meagre wages of the working class, making them poorer than they already are.”

According to the Bank Negara Malaysia website, more risk factors will be taken into account in determining premium rates, including safety and security features in a vehicle, the duration the vehicle is on the road, traffic offences on record and the geographical location of the vehicle.

Bank Negara says the price of a motor policy will differ from one insurer to another because different insurers and takaful operators have different ways of defining risk profile groups.

In a 2015 report, The Malaysian Reserve quoted Maybank Ageas Holding Bhd chief marketing officer Harvey Chamberlain as saying that low-risk customers would receive better pricing.

Chamberlain also said the imposition of detariffication could lead to unhealthy competition among insurers and this would have an impact on consumers in the short term, something that had happened in China, India, Singapore, Australia and Turkey.