The ISM-NCD System and the future of it….

writing handsWhile it was recognised as a good attempt by ISM (or Insurance Services Malaysia in case you do not know) to introduce Information Technology innovation in shaping how the non-life insurance industry administer and managing the No Claims Discount (NCD) affairs, it is still not working to an efficient level as envisaged by the industry operators.  While the bosses are talking and congratulating ISM for a job well down (obviously based on ISM summarised reporting), the downlines (those poor folks who are working hard getting the whole processes running to an acceptable level) are very upset with how things are developing. Some of them resorted to ‘sweeping matters’ under the carpet and going back to the ‘old days’ of comfirming the NCD outside the system and certainly they are more happy to do that. But then doing this on a peer-to-peer basis outside the ISM-NCD system successfully is not the end of the story – you need to have the system updated otherwise it is still a breach of tariff. And the longer you keep those information outside the system the worst the ‘under carpet’ would be. But then where to get the resources to have them done?

Making matter worst, in the latest update on the ISM-NCD compliance report, ISM branded themselves as a shared service provider and promoting a platform that helps stem premium leakages and improve controls of NCD allotment but agreed that they are toothless tigers in making the system having a compliance level of 100%. Every now and then they provided the summary of compliance report of each and every insurers including the Takaful members but ironic, the  May 2009 data shown only 19 companies out of the 35 participating companies achievingmore than 95% compliance level. However, 25 companies actually reported to have achieved above 90% compliance which goes to show that most companies are actually improving but how come the whole affair is still “a pain in the neck”?

A high compliance rate in this respect is all about how often the member companies use the ISM-NCD for confirmation and is being formulated by ISM as follow:

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Compliance rate (NCD confirmation)  = Total Confirmations
Total Confirmations + New Business w NCD w/o confirmation

Judging from this formula, it did not denote the true position of compliance. We cannot detach this compliance analytics from the data submission profile of all the member company. If the data submission to ISM is poor and the amount of data rejection is high, then a high compliance rate in NCD comfirmation usage just does not mean anything in as far as meansurement of ISM-NCD system’s effectiveness is concerned. From the year 2008′s average monthly data submission of about 75%, it means 25% of the submitted data would had been rejected thus rendering the ISM-NCD database as inadequate for the effective running of the framework. No machinery can ever run at an optimum level if the engine’s capacity can only perform at 75% the most…..

Most of handling IT staff of the member companies will not do anything on those rejected data unless there is a request by the operation personnel. In most cases the IT staff would not be uploading these batches of rejected data simply they are certain to be rejected again. In order for these data to be successfully uploaded, there must exist great resources within the Motor Underwriting and IT departments to make the necessary amendments or corrections before uploading can be successfully done, whicle bearing in mind amendments are always constrained by time. With such level of resources it is no longer cost effective to work things out on ISM-NCD platform, the industry might as well resolve to the old manual system which is not overly “time-sensitive”.

Having said what was said, I believed those reported compliance rate of 90% can only be less than 70% realistically if the formula is redefined with the data submission effectiveness factor….. Perhaps we can twitch the  formula abit by multiplying the data acceptance ratio to the current compliance rate.

With 70% and below on the average, there is just no way this platform can work efficiently. The recent proposals given by ISM is therefore not going to be effective – ISM has to acknowledge the issues raised in the last two  feedback made by the industry members. But then, from the feedback the and concept of the system, I doubted if these would be cost-effective to carry out any problem cleansing activities.

Having said what was said, I believed those reported compliance rate of 90% can only be less than 70% realistically if the formula is redefined with the data submission effectiveness factor….. Perhaps we can twitch the formula abit by multiplying the data acceptance ratio to the current compliance rate.

With 70% and below on the average, there is just no way this platform can work efficiently. The recent proposals given by ISM are therefore not going to be effective – ISM has to acknowledge the issues raised in the last two feedback given by the industry members. But then, analysing those feedback and the intended concept of the system, I doubted if the proposals could be anything cost-effective – member companies would still need to employ much more resources to have the proposals carried out.

However, I must admit that ISM and the industry can still realise those objectives of the NCD system if we all are committed in getting the front-end integration system working as an industry. With the front-end integration system, the industry must implement a ’single’ NCD confirmation system. We must believe the current system of providing two options (options of Outside-the-System and Within-System confirmation of NCD) in the confirmation of NCD is faulty and flawed. By taking away the Outside-System confirmation option, we would be able to take away 80% of our existing problems….. However, integration of any IT system can be costly to most members but it is perhaps the most cost effective method in stemming out the existing chronic problems besieging the industry. Read also: http://www.malaysianinsurance.com/ProductsJohnsonCST.html

If we can get this integration done and enforce the Within-System NCD confirmation strictly (similarity to how we obtain our daily share prices), then the industry should move forward both efficiently and effectively.

Let us cross our fingers and hope that the ISM management can cordially sit down with the “hands-on” personnel of this industry to bring the objectives to the fore-front and start making things happen for the good of our industry. Come July when the mandatory motor premium rebating starts, member companies are certain to have great problems with those walk-in customers – great problems that are currently absorbed by the agents by allowing NCD outside the system but doing it at their peril…. Do you expect the insurers to do likewise?

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6 comments for “The ISM-NCD System and the future of it….

  1. ibrahim abd rahman
    November 11, 2011 at 22:50

    Currently my NCD is 55% for 1st car and plan to buy new car.
    I plan to transfer the old NCD 55% to new car therefore i had renew the roadtax & cover note for old car with new NCD 0%.
    Do i have to fill in any form for this purpose or it automatically being calculated when register new car.
    Is the current agent to update the NCD status in the ISM?
    Please advise what should i do…

    • November 14, 2011 at 08:07

      If you renew your 1st car with 0% NCD, do request your insurer to send the info to ISM so that the NCD of 55% is preserved (in other words do advise your agent of the existing NCD). Otherwise there would be a problem when your insurer upload the data to ISM – you may end up with 0% NCD…. When you purchase the insurance for the 2nd car, get agent to obtain online the 55% NCD.

  2. Kent
    November 20, 2009 at 11:23

    Sir,

    I am having problem with my NCD when I renew my policy with a new insurer yesterday. The customer service personnel told me that my NCD with the ISM is not 55% but only 25%. So I ended up paying the full premium less out the 25% instead of 55% NCD. They told me that the company would refund me the balance of NCD once they finalise checking with ISM and that the 55% is correct.

    THis is giving us consumers so much inconvenience. Is there any advice for us consumers?

    • November 27, 2009 at 01:51

      The current NCD system where database are manage by ISM or Insurance Services Malaysia is not functioning efficiently – it failed as from the word “go”! It is really about people and IT. An IT system can and would be efficient if it starts off on the right platform but alas this ISM-NCD system rode off totally wrong – wrong side of the bed, I supposed. So much so we need outside the system (human) intervention. Well, Kent… for the timebeing let’s say we have to resolve the issue outside the system and then we have to work it back into the system so that you can have the refund back. Stay patient until the next change for ISM-NCD!

  3. July 3, 2009 at 00:23

    Dear Honest Agent against Rebate, currently there are two systems relevant to your comment: (1) ISM-NCD and (2) ISM-ABI. ISM-NCD is a system available for internal staff…it may soon be opened to all including agents and brokers once the system goes on full integration at front-end point of sales. Let’s say with this there will be no option of allowing NCD to customer without securing an approval code from this system….yes..just like getting the share prices from Stock exchange website. Staff of insurers can now use it but only thing the database is currently abit screwed up because of poor data submission, bad data quality and many confirmation still conducted outside the system with being updated….
    For ISM-ABI, this is for providing the market value of the vehicle. This system’s main platform is tagging to the chassis numbering system of diversified range of models. Currently all agents can access this….generally most insurers would have put this ISM-ABI icon in the company website…the usage is free as this is an abridged version and for public trial.
    In respect of rebating….don’t worry, things would take care of themselves….you should be doing fine with your biz….

  4. Honest Agent Against Rebate
    July 2, 2009 at 22:21

    I not know there is such system in Malaysia. As agent we still practice the same method as before to ask to show last year policy.
    Can agent check NCD on this system?

    It seem that company still blame agent when premium is not correct. Even to check the sum insured customer blame agent if wrong. Now there is also rebate for customer go direct. Agree that no way company can check NCD and Sum Insured for customer go direct.
    Honest agent cannot make money and now insurance company having more problem too due to bad IT system

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