Over the weekend I spent sometime reading through some papers concerning Asean framework agreement on facilitation of cross border transportation of people. This proposed agreement is with the view to promote and ease cross-border movement of people residing within member countries of ASEAN.
How would the motor insurance segment of our industry likely affected by those requirements? Anyway those requirements mentioned in the papers were too general in perspectives.
I was made to understand that this agreement is supposed to be a compulsory one for all ASEAN members who are signatories to the broader agreement concerning ASEAN Economic Community. However, such is still easier say than done…. But for Malaysia having taken to leadership role in ASEAN community building, this should be no second thoughts except to make this a reality as what was then to the European Unions (EU).
There are 7 parts and 26 articles within the said agreement, and how our motor insurance segment would be affected, I can’t really tell for sure. Anyway those relevant parts and articles that provide some insights into what’s next or a glimpse of the future of our motor insurance industry that’s to come, I have specifically outlined them below:
|PART I – GENERAL PROVISIONS|
|Article 3 – Definitions
For the purpose of this Agreement, the following meanings shall apply to the underlined terms:Road Vehicle: Any mechanically propelled road vehicle that is normally used for carriage of passengers and registered in the territory of one Contracting Party. It does not cover vehicles used for carriage of goods such as trucks, trailers, semi-trailers or vehicles that are incidentally used for carriage of passengers by road, or vehicles with less than four wheels.Passenger: Any person who, in the performance of a contract of carriage made by him/her or on his/her behalf, is carried by a transport operator in the course of the latter’s business.
Non-Scheduled Transport Service: Transport service to carry people for hire and/or financial reward from the place of origin in the territory of one Contracting Party to or across the territory of the other Contracting Party or Parties in the following manners:
Scheduled Transport Service: Transport service over a specified route, according to a fixed route table with predetermined stopping places and for which set fares are charged, accessible to everyone either on a first-come, first-served basis, or with prior booking.
Transport Operator: Owner, drivers and/or agents of road vehicles who
|PART III – GENERAL CONDITIONS FOR TRANSPORT OF PASSENGER|
|Article 8 – Traffic Regulations
The Contracting Parties shall endeavour to take appropriate measures to ensure the harmonisation of road traffic regulations in force in their territories conform in substance to the provisions of the Convention on Road Traffic, signed at Geneva on 19 September 1949, the Convention on Road Traffic, signed at Vienna on 8 November 1968, and the Convention on Road Sign and Signals, signed at Vienna on 8 November 1968.
|Article 14 – ASEAN Scheme of Compulsory Motor Vehicle Insurance
|Part V – MISCELLANEOUS PROVISIONS|
|Article 23 – Compliance with National Laws
Except where otherwise provided in Agreements between the Contracting Parties, including this Agreement:
|Article 25 – Assistance for Traffic Accidents
Should the road vehicle of one Contracting Party including persons be involved in traffic accidents in the territory of another Contracting Party, the latter shall provide all possible assistance to the road vehicle and persons, then notify the appropriate authorities of the Contracting Party concerned as soon as possible.Contacting Partiesin this sense refer to member countries of ASEAN being signatories to this said agreement.Host country is the country where transport operation is to be performed.
What are the likely effects on our industry?
My thoughts on this are really about how the staging mechanisms should be and I have to see them in the following light; at least from the perspectives of Malaysian insurers:
- [RELEVANT MOTOR VEHICLE RISKS] This agreement is only applicable for vehicles use in the carriage of passengers only, i.e. private cars and commercial vehicles like hire & drive, buses and taxis – in connection to the carrying of passengers across international borders of ASEAN countries (iro those who are signatories to this agreement)
- [COMPULSORY MINIMUM THIRD PARTY INSURANCE COVERAGE] There is a requirement for insurers to provide an established minimum third party related coverage in accordance to individual (member) country requirements:
- third party bodily injury or death – in this regard we should also see legal liability to passengers be extended if the say vehicle enters Singapore for this is a compulsory requirement in the country, and
- third party property damage – limit(s) for individual countries need to be observed
Under the Protocol 5: ASEAN Scheme of Compulsory Motor Vehicle Insurance, under the ASEAN Framework Agreement on the Facilitation of Goods in Transit there had been established a BLUE CARD which serve as a proof of minimum compulsory third party insurance coverage as required by the host country at point of entry. Not sure if this BLUECARD has ever been issued before but there were provisions in the said scheme catering for the setting up of a National Bureau with members coming from one’s country’s insurance industry for the purpose of making efficiency the collaborations between insurance carriers from member states.
In this regard, it is good to reexamine some of the relevant articles forming part of this said Protocol 5:
Issuance of the Blue CardThe Blue Card shall be issued by the National Bureau of each of the Contracting Parties, in accordance with Article 10 of this Protocol.
Coverage and Validity of Blue Card
|Article 9Establishment of National Bureau
Functions of the National BureauThe National Bureau shall undertake to fulfill the following functions:
As it should be, the sovereignty of each country is a priority; therefore the statutory laws of member ASEAN countries in as far as they are of relevance to operations of this said agreement, amendments are likely to kept to a basic minimum. This means insurers in Malaysia providing such minimum compulsory coverage must have the capacity to issue such an insurance policy covering such Transit Transport Operator from another member country. These insurers are likely to be listed on the BLUE CARD, being proof of an existence of such an insurance policy.
- In addition, insurers must now need to have better grasp of the legal environment in other member ASEAN countries (with likelihood of increasing transnational vehicles movement), at least in dealing with claims such as theft including recovery and own damage repairs faced by Malaysian Insured whilst travelling to those members’ country. It is likely that partnership with other insurers operating in member states is unavoidable in order to provide efficient claims handling services and dispensation of prompt payment of claims.
- There would be a contingency pool to be established by insurance carriers operating within one’s country with focus to deal with uninsured vehicles (for whatever the reasons) crossing another member state. I supposed this can be achieved with the said National Bureau.
In summary I would like to add that the newly setup Malaysia Motor Insurance Pool (MMIP), (a jointly setup with the Takaful Operators) be called upon to dispense such compulsory cover for such foreign (ASEAN member states) vehicles travelling within Malaysia?
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