The original idea to have the third party bodily injury and death (TPBID) section taken off the current motor insurance policy coverage and place them under the New Company (NewCo) is now no longer a good one. This idea is aka “third party motor cover framework” – rather baffling to me as the real reason for this proposal is to take away the bad TPBID portion from the existing policy framework, not, I repeat, not about restructuring the third party motor cover! “The whole proposed framework is about segregating the TPBID from the current established Motor Insurance coverage!”
Also do bear in mind this supposedly NewCo is to be largely funded by the government with both the Conventional non-life insurers and General Takaful Opertors taking a share of this NewCo.
After much hoo-haa.. especially with the Bar Council’s bashing session of this proposed insurance policy framework, things had finally died down. As at end-May 2010, a total of 125 respondents had submitted their feedback via email, memoranda or letters to editors of national newspapers. Feedback was received from members of the public, consumer, transport, and business associations, political parties, Members of Parliament, the Bar Council and lawyers, insurers and insurance agents.
We can simply sum up those feedbacks from the perspectives of “public concerns” as follow:
|1||Delays in claims settlement – from claims for property damage against a third party to fighting it out in courts over who is the negligent party and to what extent the person is liable. Dispute over quantum is also rampant until someone just need to give way!|
Premium in respect of third party insurance too high: Premium should be based on past performance of drivers not penalising a cross section of the public for losses created by a few
|3||Generally most can accept a cap on the TPBID claim quantum per claimant basis but it should be much more higher than the RM2 million proposed|
Peoples are worried about the funding and the costs that the government is going to incur for setting up this NewCo – some viewed this as another form of subsidy. What if the amount spent was proven not adequate subsequently? Injecting more fund is going to be obvious?
What makes BNM thinks that they are more capable to handling the escalating or runaway TPBID costs where the insurers failed because premium cannot be increased beyond the fixed threshold?
|5||There were some arguments for the adoption of No-Fault Liability scheme while others felt this adoption is certain to push more losses into the insurance system which would mean increasing costs, thence rising premium.|
|6||Denying third party claimants’ rights to dispute the claim to the courts. BNM and the insurance industry were seen by the Bar Council as trying to change the rule of engagement – severely affecting their rice bowl; and for parties not satisfied with the settlement quantum, they may have limited or no recourse except to follow the scale of compensation.
Going through and digesting those feedback, I just can’t help but have to accept the fact that this exercise is really of no help to getting the proposed framework forward. The framework is being tossed forward, backward, to and fro – going nowhere! Moreover most of the feedback are from people who have personal agenda in this subject matter – some may be from the legal fraternity, some were from the claims handling fraternity, the journalists and so on…..
What is the real problem here?
This crux of the problem is really in the reason(s) for doing so…. the WHY and WHAT’s IN IT FOR ME factors.
|1.||The objectives of carrying our the proposed third party insurance framework were uncleared… at least to the majority of the public. For most time the people driving this proposed framework were too engrossed in presenting the issues of third party insurance and the framework is all about third party insurance, which the public is finding it difficult to buy at reasonable premium, especially if the vehicle is more than 15 years.
|2.||When the WHYs and the WHAT’s in it for us factors were never accorded with clarity at the outset, so how is it that the public able to acquire some proper understanding of the matter?
The Bar council saw the proposal as breaking their rice bowls especially for those who are very much involved with motor insurance claims; the journalists interpreted the whole affair as something that is mind-boggling – when insurance companies are still making money from motor insurance, thus, what’s the heck do we all need to have such a mind-boggling exercise! Certainly the insurance fraternity felt the industry should be given a chance to go it out on their own if the Bank Negara will just remove the ceiling limit to the loading on the basic premium for sector that should have contributed more to the premium pool.
Well… the public only saw the big fuss was all about the increasing premium being applied to their commercial vehicles and third party insurances. Of course they took the opportunity to stress on the ever problematic claim practices; mostly don’t make them happy at all not to mention their ever suspicious of what’s transpiring in between workshop, adjuster and claims handlers! Or even bad insurer(s) that would find all sorts of way not to pay a claim.
Then…. you do have a segment of the claims handling fraternity with direct involvement in third party bodily injury claims, losing their job overnight if this becomes a reality! Of course they viewed this proposal as absurd!
From what I have written above it is not difficult to visualise why we are NOT arriving at the objectives. We were too focused getting at the HOW and the WHAT TO DO…. treating the whole issue as if the insuring public and the third party service providers FACELESS! “We must always bear in mind, any objectives that need to be achieved must be of people-centrix, meeting expectation of the stakeholders otherwise whatever the proposal there is, it is doomed to fail from the word GO!”
For most times we had overly focused on how to derive a fool-proof concept to make the proposed framework working. We have gone forward towards the technical and the legal specs for the whole framework…. so much so…. we ended up losing sight of the very fact that this change is supposed to be for the benefits of the public at large, and most if not all stakeholders would not lose out in the process.
But then what were those objectives in as far as the insuring public is concerned? Perhaps this question is best left for those in the driving-seat committee to answer.