After Kurnia and ISM announced the ISM – ABI system’s MARKET VALUATION tie-up, which involve integrating Kurnia’s front-end point-of-sales system with ISM – ABI system, my phone(s) were flooded with calls enquiring and query as to why we were slow or rather inactive in this form of integration. The perception was that it is of great benefits to the agents!
Is integration with ISM-ABI system at the front-end a really good stuff with Return of Investment (ROI) achievable?
Without arguing our hearts out, it is best to tag those pros and cons as depicted in those ISM’s circulars and presentations over the last couple of years:
Having tagged the PROS and CONS of the system, it looks very clear as to why most insurers do not rush into integrating their front-end point-of-system with ISM – ABI. ““The endorsement 113 has two faces – agreed value for total loss but average clause applicable if otherwise – isn’t this confusing for the customers?”
Probably it makes more sense if we can make it consistent on the basis of everything being on agreed value – agreed to the ABI valuation at commencement of cover. It is time for the industry to consider two options to setting the Sum Insured (of Private Motor vehicles and Motorcycles only) – one being based on an agreed ABI value and the other on the usual market value as provided by the Insured where average clause applies. This makes explanation easier and understandable, at least from the Insured’s perspectives.
On the contrary, we should not wish this for the COMMERCIAL vehicle segments – even with the current endorsement 113, this sounds abit bad for the insurers, having agreed value tagged to total loss events!
On the other hand it would be most unfair if we did not tag what was being argued by ISM over the past few years…
|All insurers stand to gain by using the system which is tightly integrated with the ISM-NCD System as part of improving motor underwriting controls. The real value are:
These controls will be critical when the new motor insurance system is implemented. The system can also be used to determine the market value at the time of claim.
What was meant by “Controlling the sum insured…..”? and “Accurately identifying and recording the vehicle being insured”? Are they trying to tell the insurers that they are not able to control the setting of sum insured and administration of market value in the claims settlement process? The answers in every underwriter’s mind have always been clear – insurers are more capable of handling their own controls better than to opt for some outsourced system with a much different way of executing things and most likely duplicating what is already in place. Does this justify any of the ROI? “The current method of setting the sum insured somehow allows the Insured to set it SOMEWHERE NEAR the market value, ie. there is a 10% margin to play with before average clause is called into effect“
What was said by the ISM may sounds true on paper but in practice this can be extremely difficult – the finance institution may not agree with the ABI value that is lower than their’s at time of financing, the customer may not see the logic if the ABI value is higher than the finance’s valuation of the vehicle. On the other hand, the existing method also provides customers and agents to craft the SUM INSURED within the 10% MARGIN which enables some PREMIUM SAVINGS where necessary! The intermediaries and insurance practitioners at the front lines have acquired such crafting ability – “WHY TAKE IT AWAY?”
But admist this argument, this does not mean things are looking bad for Kurnia! They may have other strategies behind this show…..We wish them well.
Hope to get some exchanges of view – Do comment in the comment form below. THANK YOU FOR YOUR NO-HOLD BARRED EXCHANGES – THE INDUSTRY NEEDS THEM TO THRIVE…..