The Guidelines in respect of Direct Motor Mandatory Rebate (click on the PDF for details of the Guidelines) can be quite confusing, having confused numerous insurers when it was first implemented on 1st July 2009. Now some critical issues were also raised recently in respect of subsection 4.1.1 (highlighted in yellow) – “Motor Business” – whether the percentage of rebating comes the first anniversary year of implementation (1st July 2010) is to be 10% across for all direct motor insurance purchases or given depending on the whether this is the first year of direct purchase or into the second year of direct purchase. Two versions of interpretation:
(1) Interpretation according to “Case-to-case” perspective
The interpretation during the earlier stages was to allow only a 5% rebate if the direct purchase is made the first time on or after 1st July 2010 and 10% if this is a second time of direct purchase, and so on. This seems to be the fact if we read the wordings from the holistic perspectives of the guidelines and that subsection 4.1.1 should relates to an individual case as it is being issued.Naturally implementation would be a mammoth task.
(2) Second reading taking the portfolio and implementation date as the basis of interpretation
However, on second reading, this does not sounds like what it was interpreted earlier…..if we read the wordings purely from the portfolio of the insurer where the implementation date being the focal point.
Never mind! That’s perhaps “How the West was won” anyway when coming to getting things moving to a new frontier! Making things easier, it is best to adopt things simple and straightforward as read:
With effect 1st July 2009 till 30th June 2010 – All direct Motor (individual) purchases, mandatory rebate is 5% of premium payable, thereafter
With effect 1st July 2010 onwards – All direct Motor (individual) purchases, mandatory rebate shall be 10% of premium payable irregardless whether such is a renewal or otherwise.