New Motor Insurance Framework | 1st May 2011 Implementation


In a recent meeting between Central Bank (aka Bank Negara) and industry (both conventional insurers and takasul operators) officials, Central Bank has directed the industry to make necessary preparation for a 1st May 2011 roll-out of the framework implementation…. which is a surprise considering earlier on, the implementation date was set on 1st Jan 2012.

Motor Insurance Framework

Yes! No one gets rejected simply because he smashes up his or someone else car....

Accordingly, this 1st May roll-out is more of a prelude to the 1st Jan 2012 core implementation. What’s entails in this roll-out has one single most important objective, that is to ensure all insurance buying customers are not rejected and given a run-around getting their vehicle covered.


“Single most important objective…. Industry cannot reject customers buying insurance or giving them unjustifiable inconvenience….”

Other objectives would include the following:

  1. No unfair pricing of motor premium
  2. No unjustifiable cross-selling (using packaging of products to force….) or system-driven (automated) selling of other insurance products when selling to the customers
  3. Any motor insurance cover requested that is not within the insurer or takaful operator’s internal motor guidelines, the industry is to issue such cover to the Malaysian Motor Insurance Pool (aka MMIP). And, before issuing the MMIP cover, the customer should be advised accordingly and having agreed with the type and nature of the cover issued. Do note DUMPING of cover into MMIP or any attempt thereat is NOT really an option for the industry!
  4. The industry should explain to the customers those available motor extension coverages, i.e. passengers’ liability, flood, windscreen…. so that options are made available to them
  5. Industry should review their underwriting guide to make it more pleasant for those “displaced customers” – “displaced customers” in this context is about those customers having their private motor cars and motorcycles being dumped without good justification into the MMIP. As MMIP is a pool catering for HIGH HAZARDOUS vehicles, this category of “private cars and motorcycles” should not in the first instance be written into the MMIP. To further stress…. as a matter of example, the industry cannot raise the issue of third party insurance coverage as a loss-making portfolio therefore enforce a DECLINED across all segments of the buying public! There is no justification to such across-the-board sort of enforcement…. What the industry should be focusing on is check the background (including loss records) of the customers and apply the declined-related decision accordingly, NOT write him or her off as if is a PORTFOLIO or worse…. FACELESS!


While we have written down those objectives and the various areas of focus in order for the industry to achieve the directive…. so, what’s in it for the agents or perhaps the other intermediaries? Frankly speaking, there is NOTHING for the agents (and other intermediaries) – NO commission BUT really…. more tasks at hand!

While NO COMMISSION there is to this 1st May roll-out, agents should look at this from the perspectives of HALF FULL cup rather than HALF EMPTY, which we think agents are not disagreeing to it…. we supposed there are opportunities in this roll-out, it is a matter of mind-set!

“Agents are expected to mirror what the insurers and takaful operators are doing… no rejection or turning away customers but lend a helping hand to them”

In this context the following are what agents can do to help out with the industry, and in doing so help their agency reinforce services to both customers and industry:

  1. Agents should likewise NOT reject the buying public outright (based on the internal motor guide) but instead direct them to their principal(s) for assistance or the best practice, to help the public buy the MMIP cover…. The latter best practice should help agents reinforce their brand and services level
  2. (Customers going direct to insurers / takaful operators are NOT going to get any form of DIRECT REBATE….) thus agents compiling the customers documents and bring them over to their principal’s office should be able to charge the customers a small CONVENIENCE fee for handling the full process for them – THIS IS REALLY AN OPPORTUNITY!
  3. Agents helping the buying public with the run around should eventually be rewarded by both the buying public and their principal(s)… Why?
    • The customers’ perspective: “I will go back to this agent who despite NOT getting anything helps resolve my buying needs!”
    • The Principal’s perpsective: “We shall reward those agents who despite NOT getting anthing but yet, resolved to help the buying public made the necessary purchases… and in the process helps reduced our workload, firstly by working out the necessary documentation & coverage and secondly, help remit the premium to the them.

“We hope the agency channel views this recent adoption as something strategic for them and look at the opportunities rather than with dissappointment….”

We hope all our readers like this writeup…. and do comment to make this web-place a good insurance information gathering place!

Thank you for reading and being active with us.


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16 comments for “New Motor Insurance Framework | 1st May 2011 Implementation

  1. Ronald
    December 6, 2011 at 11:47

    Hi,i bought High Risk Poll insurance last year from an agent but i think they charge me RM100 for the service.
    If i want to renew myself at POS,what document should i bring along?

    • December 11, 2011 at 22:22

      No need to visit the POS office, just go to any insurance companies, like Berjaya Sompo, Kurnia, Multi-Purpose or Uni.Asia. They should be able to assist you.

  2. andrewwong
    July 5, 2011 at 23:42

    I am most agreeable with Mr Veera’s comments of 17/4/2011. But on the other hand, our consumers are also a pampered lot. They are educated but refused to do some readings. Or maybe educated but still cannot do some readings.

    Take for example, you purchase a microwave oven manufactured by Panasonic. To understand how it can funtioned to its ultimate best, the consumer needs to read the manual booklet, surf the net to find out more, exchange conversation with friends and friends of friends. The dealer/agent will only be able to teach the consumer some basic operation modes like on-off switch and timer dial. And, should the oven malfunction, the consumer can either take it back to the dealer or direct to the principal; Panasonic. If taken back to the dealer, the dealer will ultimately send it to their pricipal and wait for final advise from them on the cost of repair or whether warranty will response. The present of the dealers in a way among others can be construed as convenience to consumers.

    In the same context, what I’m trying to say agents too are a convenience to consumers. Most agents can explain the basic purpose on certain classes of insurance product. A motor insurance for example. ~ There are many remote situations an agent may not think would happened until it happens. A classic example is damage caused by riot. The basic motor covers Fire, Theft & Accidental which the agent can explain in plain words.

    When a claim on riot arises, and SRCC was not extended, the agent gets the blame. Or keeping the engine on and a stranger gets in to drive away and the Insured call it `theft’. When the policy don’t pay, the agent gets the blame again. This is like after buying a fridge, you later discovered it is not frost free and, the dealer gets the blame. Or when you overheat the oven, got short-circuited and you blame the dealer for not telling you that such situation is not covered by the warranty.

    IMHO, the Insured should knows what he want, look for an agent (more convenient than to go to an insurance company) to purchase that particular class of insurance. The agent’s job is to process the sales and purchase between Insured and Insurer and his job is done.

    When a claim arises, the Insured can either contact the agent or the Insurer. If chose to contact the agent, the process would be similar to that of the dealer taking the oven back to the principal and then wait for their advise on the claim outcome.

    Hahaha…..this is only airing voice of frustrations that many agents are experiencing. In practice, somehow consumers will never accept such argument although there are traces of logic ~ UNLESS all agents practice what’s been empathised.

    • July 13, 2011 at 23:20

      To a large extent I agree with your contention…. however, society is changing and the consumer expectation is changing, certainly demand for fairness is rising too – we all as consumers demand alot from the providers, mainly cheap and good and lasting…. and certainly not the providers relying on technical specs to throw out a request. Recently the Central bank rejected the PIAM FSC’s Householder/Houseowner plain language policy wordings which they submitted thinking this was some great piece of work. Alas to their dissappointment, the Bank don’t see it as friendly enough. There are just too many technical terms, like material facts, household members, storm and tempest…… which to the consumers are just full of uncertainties…. Frankly speaking, you as consumer does not want to be told that your large claim is NOT covered! You can return your microwaves oven if it is not functioning to expectation… But you can never return your policy after a large claim that is not covered, can you? I would be most dissappointed or perhaps fainted if told my house which was burnt down is not covered by the policy simply because I stock up some direct selling products in my house in sizeable quantities…. After spending sometime on the Motor Insurance plain language policy drafting, I came to a simple conclusion…. all of us in this industry owe our success to the consumers out there…. simply put, we must learn how to take away the contractual and the legality mindset when doing so, just focus on writing the contract as if you are relating to them the consumers, each and every paragraphs of the policy.

  3. pakwan
    April 21, 2011 at 01:43

    i believe , lately, most insurers intend to imposed so called pocket monies, such as personal accidents cart and so on. would that be fixed tariff then?

    • April 23, 2011 at 23:32

      This is called taking opportunity to charge more but should not be any part of the tariff.

  4. Jap-pan
    April 18, 2011 at 23:59

    believe this new procedures make no difference for consumers, insurers will still pass those unwanted business to MMIP, only real difference is consumers get the MMIP cover faster only. No savings there is to it!

    • IJ
      April 19, 2011 at 12:05

      agree with u mate. BTW, whats up with trying to curb the dumping inward MMIP but then granting more lincences for MMIP operation.
      Just trying to be fair to all insurers or are we expecting more inflows toward MMIP this year forward???

      • April 23, 2011 at 09:37

        Don’t think there will be any surge in inflows to MMIP after 1st May. Having more insurers / takaful operators would increase efficiency in transaction for the buying public. Moving forward the number of vehicles displaced into MMIP would decrease once the Central Bank is more able to control the situation – some called it being forced…

    • Anonymous
      April 23, 2011 at 00:35

      For the general public this is one great starting point. make sure don’t get bullied by the big corporations!

  5. Kleong
    April 17, 2011 at 19:45

    Things will not change and insurers will continue to be selective. To ensure that it works, every insurer must display their motor underwriting guide in their front office and not hiding them for their own convenience in rejecting risks they do not want. Doing that will show their sincererity in wanting to comply with BNM guidelines

    • April 18, 2011 at 12:43

      Well said…. anyway, nothing to stop customers from requesting an explanation insurers / takaful operators if their internal guidelines are perceived as overly stringent.

  6. T.Veerappan @ Wira Jaya Agency
    April 17, 2011 at 19:14

    No nobody can deny that an agent’s role in the insurance industry and their services are very important as intermediataries of dispersing insurance related informations or any changes both from the insurance companies and the regulatory authorities especially in small towns and rural areas, its also a known fact whereby the bulk of the insurance business were brought in by the insurance agents to the insurance companies and the services rendered are many to the insurance buying public.An agent renders his sevices to his clients sometimes 24 hours and also on weekends since he do not switch off his hand phone unlike the post office,banks,or insurance companies themselves.The agent plays a critical role during the emergency times and needs of his clients and guide them what to do next.All these services are provided to their clients free of charges since they purchase the insurance policies with the agent.The industry players and regulatory authority should take consideration of all parties in the chain of services and their welfare are duly protected, all parties including the agents.Thats what we call a comprehensive solutions and all parties interest are taken cared by the caring societies or by the regulatory government agency.If the agents contributions are neglected or not recognised then what will happen to those agents being in the industries for so many years and like rest of others they too have commitments to their families needs? There are agents in business for over 20,30 or more years.They sometimes give a lot feedback information to the insurance companies and these insurance companies have created a lot of insurance products based on the needs of public or the clients.Any changes in the industry should be all inclusive and the interest of the agents are taken cared and the professionalism on all levels upgraded.

    • April 18, 2011 at 12:41

      Dear Veera… I agreed with your opinion but insurers and takaful operators who signed up (or rather being enforced) as a sales channel are only alloted a 6.5% fee for providing the much needed MMIP services to the public. There is nothing much those principals could offer to the agents who wish to provide assistance (beyond the call of duty) to their customers. Anyway, this site is a place for agents to air their views as well as allowing us to disseminate industry info to all levels of industry practitioners and specifically to agents who would want to improve their level of services to their clientele via the internet media…. Hope to keep such exchanges coming in.

  7. norizan
    April 16, 2011 at 17:55

    feel relief when this rules to be imposed. Fair and square to all parties. hoping that all the underwriters to be more heartful of considerations when doing business. Go back to the claims’ history of the drivers/owners. Not the age of the vehicles alone. Old does not mean high risk or prone to accident. Sometimes, with a very good maintenance, the ‘ages’ vehicles still in a very good condition.


    • April 17, 2011 at 09:23

      My opinion is insurers / takaful operators would still be dumping third party cover, old vehicles, commercial vehicles…… anything that is not helping their bottomline… into MMIP accounts across the board. So it will probably takes more than half a year later for things to actually change.

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