The Pos M’sia factor… Political or Insurers’ own doing?

All insurers writing non-life insurance business in Malaysia are required to take up share in the Malaysia High Risks (unplaced) Motor Pool, now named as Malaysia Motor Insurance Pool (MMIP) during its formative stages; back in 1992. The shares are on equal basis. It is not something you wish for but for the sake of national service…. Over time, things changed, there are now lesser companies compared to MMIP’s formative days, ie. Peoples Insurance,  Malaysian Nippon, Nusantara, Sime Axa, Amanah, Panglobal, …..have all disbanded, resulting in the existing insurers having more shares in MMIP. This is Good news during the period between 1999 and 2007. But with so many insurers rejecting the “undesired” motor risks, like third party, A permit, taxi and buses, (to sum it up – truly high risks models) thus it is unimaginable how the pool can stay afloat….. If it does not, then it can be a long term pain in the arse again!

Two insurers, Multi-purpose and Uni.Asia obtained the rights to sell the MMIP’s brand of unplaced motor insurance….back in the 1990s. Correction, many do not want to have anything to do with “baby-sitting” for MMIP, eventhough the managment fee  is 15%. For those risks to be accepted under the MMIP,  the proposers must prove that at least two insurers rejected his or her motor risks. Of course, MMIP can charge higher premium (as the tariff structure is allowed by the Bank to have a higher load-cap).

When the markets started showing some runaway losses, especially from the third party bodily injury (aka ACT) aspect (market loss ratio ran up almost 300%), many tried to offload their “baggage” or rather should I say, “dump” them as fast as they can?

Suddenly everyone realised, “Who moved my cheese?” and started sharing thought and working together to  influence Central Bank for an increase in the Motor tariff premium, which have had not been reviewed for the last 33 years???  Far fetch from the days when insurers competed intensely mad (by paying some specialties to intermediaries, free gifts and more free gifts…blah, blah…) for all kinds of motor biz. Perhaps investments incomes were good then!

Actuary was called in to review again those analyses done over previous years…. so it goes, to jump start the Revised Motor Underwriting Table (RMUT) – I am not sure whether this RMUT is now termed phase 3 or 4?That’s to me is no longer relevant. These were expensive stuff! Boy oh boy! BTW, not sure those statistics obtained from ISM were good for those actuarial analysis.

When all these analyses (or analytics) were presented to the Central Bank, things never really got started the way they were envisaged – Central Bank turned it the other way and the industry ended up giving more, ie. more goodies to the market, rather than getting more premium in the process. BAD DAY for everyone….. RBC tabulation screwed up abit more, when SCAR dipped further with some insurers getting nearer to 150%! If ROI continued at current lackluster level, it is another of those going gets tough! THE BIG QUESTION is about getting a higher loading over and above what the Bank had capped since the 90s. We are not asking for too much are we? Even if the Bank agreed with the higher loading cap, not necessary all insurers will likewise apply across…. Certainly, it will not hurt the consumers!

While the industry continues to give, the BIG QUESTION here is really, “Why were the insurers not allowed by MMIP to participate in MMIP insurance distributions?” Afterall, all the insurers have shares in the Pool and on top of this all insurers combined can provide more than 684 outlets…together with their combined agency force, is this correct?

It is really a SAD THING, POS Malaysia as usual got to it and the members of the Pool are all left fuming! I am sure Kurnia is waiting for their turn to participate. The larger agency force are also waiting in line to be called to service…. But this was not to be; just like this tumbling ride in between the legs! Owh!

Another sad day for the industry with members not able to plan and strategise for the industry in a more dynamic manner! You have any comment….. please show up!

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Tags: MMIP, Old vehicle insurance, POS Malaysia