The General Insurance Association of Malaysia (PIAM) is planning to work with the government to reduce the number of road accidents in the country by 50%.
Its chairman Antony Lee Fook Weng said the alarming increase in motor insurance claims for the first half of 2018 (1H18) requires urgent measures be taken to reduce accidents nationwide.
“We have already met Minister of Transport Anthony Loke to explore initiatives that would make Malaysian roads safe for all motorists.
“The motor insurance segment generally is losing the most money in the industry due to an increasing number of claims lately,” Lee told reporters at the general insurance’s 1H18 performance in Kuala Lumpur last week.
According to PIAM, a whooping RM2.71 billion was paid out in motor insurance claims for the first six months of this year — which trans- lates to RM14.8 million per day.
“Based on the statistics published by the Ministry of Transport, a total of 533,875 accidents were recorded in 2017, which is an increase of 2.4% from 521,246 accidents in 2016.
“Fatalities stood at 6,740 deaths in 2017 and motorcyclists topped the chart, accounting for more than 60% of the amount,” Lee added.
He highlighted that Malaysia has one of the highest accident and fatality rates in the region and PIAM is intensifying collaboration with all major stakeholders to reduce road accidents nationwide.
In the short term, Lee said PIAM will work with the government to reduce the number of accidents by 20% and, on a longer term, reduce the number by half.
“We are considering publishing statistics on accidents according to states so that the right actions are taken by the right group, accordingly,” Lee said.
Although consumer education on road safety is important, Lee believes enforcement by the relevant authorities is equally crucial.
He added that most accidents were largely caused by reckless driving.
“The KEJARA system is welcomed by the insurance industry as information on errant and high-risk drivers is useful.
“With the liberalisation of motor tariffs, information on traffic offenders will help insurers determine the risk profile so that high risks are recognised, while good drivers are incentivised,” he said.
The sector recorded RM4.2 billion in gross written premiums in 1H18, a slower growth of 0.2% year-on-year (YoY) compared to a 2.1% YoY growth in the same period last year.
Lee attributed the slower growth to weaker consumer confidence amid the uncertain economic and political environment prior to the 14th General Election.
Overall, the general insurance industry registered a marginal growth of 0.7% YoY in gross written premiums to RM9.23 billion in the first six months of 2018.
Motor remained the largest class of insurance with a market share of 45.6%, followed by fire at 19.2%, and marine, aviation and transit at 8.2%.
As for the Sales and Services Tax (SST) introduction effective Sept 1, Lee believes it would adversely affect the industry.
“SST does not encourage the public to take up insurance, as the cost will spill over to consumers — however, the government has made its deci- sion. We have to abide by it and try to minimise the disruptions and hiccups, especially in its implementation,” Lee said.
Insurance and takaful services, including general insurance for individuals, are among the items listed as taxable with a 6% service tax under SST.
Following this, Lee said PIAM will present its position and appeal to the Ministry of Finance.
PIAM anticipates full-year growth to remain subdued, given the general insurance industry merely recorded a 0.1% growth in 2017.
“It would be a slightly unusual 2H18, coming out from the Goods and Services Tax holiday, and we expect there would be a slowdown starting Sept 1,” he added.
Thanks to Malaysian Reserves