Say NO to Motor third party bodily injury and death liability limit of RM2 million…..

The deadline for submitting your protest or suggestions or even arguments over the proposed TPBID mandatory (Newco) scheme is already over. The government has decided, and the new basic third party insurance policy will be sold nationwide come Jan next year….This basic third party policy is the minimum insurance version that insurers would be selling and is really nothing different from the existing third party insurance cover, except the Insured(s) will not be imposed any loading without the sanction given by the Newco….

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This third party basic will be in two major sections – one being the mandatory third party bodily injury & death (TPBID) and the other part the third party property damage (TPPD). The former section (or the mandatory section) will be segregated and remitted to the Newco for TPBID, and the latter, continues to be part of the insurers and takaful operators’ domain.

Please note that the limit imposed on the TPBID is RM2 million – not sure if this limit relates to an event or to individual injured third part – most likely it is on individual party. Anyway, it is good to note that there is already an existing TPPD limit imposed in the existing motor policy, and it is unlikely to be amended….

The Insured has the option to top up this basic third party cover with a voluntary third party liability cover – perhaps the limit is up to the individual insurer providing the cover. The likely maximum limit that I know at this very moment is RM50 million…. that’s the most, which unlike now, is “UNLIMITED”! Premium-wise, it is likely to be tariffed although the industry is requesting for insurer’s independent rating.

Of course there are other top-ups (with premium) like, damage to own vehicle, theft, liability to passengers (limit is likely to be capped at RM2 million), personal accident, windscreen, etc…..

Please do note…. Insured cannot just buy a basic third party insurance from one insurer and then buy the other non-third party sections from another!

While Insured will not be subjected to loading on their third party insurance, this cannot be said for the other sections of the coverage. However, if any form of loading is to apply, the percentage or quantum cannot exceed those prescribed in the tariff or those of Bank Negara’s permissible level.

Of course with this new scheme and creation of the Newco, insurers and takaful operators are going to lose out! Looks stupid for not loading those COMMERCIAL and HIGHER RISKS VEHICLES, right? Anyway, according to the new agreement under the TPBID Newco, the industry is not supposed to load on the third party basic policy…. Hopefully, the Bank Negara would not stick to such a decision…..

Hopefully, MMIP is NOT disbanded and continues to serve the HIGH RISKS MOTOR CATEGORIES and it should stay that way….at all costs, thus giving room for insurers and takaful operators to manoeuvre in rejecting those higher commercial vehicle risks.

PLEASE DON'T SELL AWAY MY "UNLIMITED LIABILITY" RIGHTS

WHATEVER THE DIRECTION THE INDUSTRY IS TO TAKE…… AS CONSUMERS WE SHOULD REJECT THE LIMIT ON TPBID THAT IS SET AT RM2 MILLION! Despite the existing limits already imposed by various statutory laws like the Civil Law Act, Malaysian should DEMAND for a much higher limit, at least, we should be getting a limit nothing less than RM15 million.

Although the richer Malaysian can buy the voluntary top-up, but it is unlikely that our poorer cousins would be taking up any – thus relying on just the mandatory cover!

This method of TPBI liability top-up is not practical and lend a hand towards the rich oppressing the poor in the even the richer third party claimants are adamant towards getting the poorer folks bankrupt via the court process….. therefore, likely to create AN UNJUST SOCIETY!

MALAYSIAN SHOULD NOT GIVE UP THEIR RIGHTS TO THE EXISTING “UNLIMITED LIABILITY” ALREADY PRESCRIBED IN OUR ROAD TRANSPORT ACT! This is already our RIGHTS! If there is a need to give in, then the limit should not be less than RM15 million…. as the highest known TPBI claim that was successfully made did hit near the RM12 million mark! It certainly does not sound intelligent talking about 92% or so of all TPBID claims as falling below the RM2 million mark, therefore we should use the RM2 million as the limit!

Moreover the Newco can always purchase some form of reinsurance to protect any losses hitting pass the RM2 million mark, and I must say is not going to be expensive…. Thus, there is really no reason for such a small limit of RM2 million!

I sincerely hope the industry experts should balance up the industry’s and consumers’ rights in the most sensible of ways….




 

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13 comments for “Say NO to Motor third party bodily injury and death liability limit of RM2 million…..

  1. June 7, 2010 at 16:17

    Great information! I’ve been looking for something like this for a while now. Thanks!

  2. Anonymous
    May 28, 2010 at 21:01

    Malaysia Insurance,

    Disagree with your views. The RM2 million is very much a compromise from BNM. If you do recall, the earlier limit was RM100k. If you look at the statistics, majority of cases decided was within RM100k.

    The highest award in the country for bodily injury cases in Malaysua were given by 2 “famous” Sessions Court Judges in Kuantan. In 2 seperate cases, the award was RM10 million each. One of the case is pending appeal while the other was settled for RM2.4 million.

    If the readers wonder why the insurance industry is in the mess as far as losses for Act Cover, it is simply misalignment of premium. Over the years, the quantum for general damages bodily injuries and special damages had increased tremendously since 1978.

    For better understanding how the legal system work, perhaps you should pay a visit to Sessions Court in Malaysia, particularly in Klang, Selayang and Johor Bahru.

    • June 1, 2010 at 01:00

      We disagreed with the TPBID limit of RM2m simply because of the following arguments:
      1. The RTO has provided for an unlimited Act cover for all road users including pedestrian and both insurers and reinsurers are still able to provide for this limit. Most former British colonies until today still have this unlimited liability. Countries that do not practice unlimited liability have a much higher limit that this miserable RM2m limit (proposed). This means the limit would make us slightly better than a third world country! The question within this argument is why we should let go off the unlimited cover when there is really no issue to it! As to the issue of the earlier RM100,000 and RM200,000 limits…. these are bullshit!
      2. The main issue surrounding the argument as to why we need to form a Newco with substantial government subsidies is because government is insistent on not allowing adequate loading to the under-priced category…. of the motor insurance cover. The simple analogy of NOT LOADING but reducing the ACT LIMIT is stupid argument as you have rightly pointed out…. most TPBID claims fall below RM2 m. A schoolboy should be able to tell you that this proposal does not hold water! It is liken when you lose your gold coins somewhere in the dark but you choose to look for it in the area where it is lighted! Simply said… no reason again for limiting the ACT cover!
      3. Limiting the ACT to RM2m and getting the richer ones to buy voluntary top-up is mind-boggling – How can you explain to a tourist who got into an accident with a poor man and he can only claim up to RM2m if indeed he met with a crippling injury? We must at least have a reasonable amount…. if at all we need to limit, ie. RM30m. In fact the industry is agreeable to RM50m earlier on!
      4. Following the Japanese CALI concept! My foot! The CALI practice allows the government to load and there is no participation in terms of shareholding by insurers – government holds 100% and premium is subject to risk-based, reviewed every 6 months… and there are substantial penalties for extremely bad drivers. But our Malaysian version has no such mechanism…. despite they say will increase premium at a later date, the government may not have those political wills to do it! And then what? The RM2m limit may be stuck in time against inflation…. and we as consumers may suffer later on!
      5. Having a much higher limit is not a problem – The Newco can buy reinsurance XL cover… any reinsurer would be able to structure out something good and cheap deals if deductible is RM2m

      That’s the reason why as consumers we should protect what’s already established since 1957 bearing in mind Idris Jala did mention we can be a bankrupt nation with too much of a subsidy!

      • Anonymous
        June 2, 2010 at 19:26

        ya, lah! if the issue is high loss ratio for act cover, why hit at the limit of claim for third party bodily injury? The real issue is insufficient premium! And even if the limit is lowered this still can never save the situation of deteriorating loss ratio! sometimes those people who coined this newco out takes us to Hol-lan!

        • June 3, 2010 at 23:20

          Yeah… this is really about insufficient premium, not about limiting TPBID liability. When we use the Japanese CALI principles we have to remember that their rates are always being reviewed and there are penalties involved for poor drivers! Ours is like no review in premiums and not about to penalise those mat rempit and dare devils….

  3. May 20, 2010 at 16:33

    I am a tourist from Germany coming onto Malaysian soil, met an accident as a result of some negligence of a motorcyclist. Despite all the issues and a high claims quantum which may somehow exceed 2m, how then can I claim more if i feel that i should be claim more than the 2m ringgit. The standard of living in Germany is very high so i am only entitle to 2m miserable ringgit?

    • May 20, 2010 at 23:36

      I supposed they have not thought about the olde… good ole tourist from the more developed countries… Singaporean may avoid coming here!

  4. ganesh
    May 18, 2010 at 14:11

    Come to think of the limit on third party Act liability of RM2m is low. What if you have a third party claimant filing a total claim of RM10 against me and he insists on taking me all the way to court! And what if I only have the mandatory portion, which gives me only RM2m cover? Who will pay for my legal fee to defend the suit since the new scheme does not provide cover for defence costs, or does it provide for defence costs?

    • May 19, 2010 at 00:02

      Chances, there is no provision for legal defense costs as the Newco TPBID Scheme is litigation shy… If some third party claimant sue you for such a huge amount, then all hell broke lose, and I am sure the Newco would just suspend the cover and request you to deal with the suit in the best way possible!
      While the limit for the mandatory TPBID is RM2million, there are pockets of limits being imposed, like…. a cap on surgeon fee, medicine, miscellaneous supplies, etc…… which would have limit you claim unnecessarily.

      • Anonymous
        May 19, 2010 at 23:46

        Is this unlimted Act liability our rights?

        • May 20, 2010 at 23:34

          Not really our rights per se but it is certainly a perceived one after having provided for since 1957….. If only some small section of the public cannot buy their insurance at low price, why drag the rest of Malaysian to a RM2 million liability limit? Does not sound anything intelligent!

  5. May 18, 2010 at 00:34

    [New Post] Say NO to Motor third party bodily injury and death liability limit of RM2 million….. – via @twitoaster http://www.malaysiainsurance.info/?p=339

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