Majlis Pengawasan Syariah Etiqa Takaful

Sunday, March 13, 2011

Parliament Issues - Increased Insurance Rates

Insurance should be a requirement for every person, not a burden. And each person must think who he is not forced to take insurance but he actually need insurance. If he was wrong here, all the statement after this will continue the mistake.

Why the need? Because in the history, if the vehicle is not covered by an insurance, the innocent victims will always be abused. Imagine that your car broken by others, and they eager to avoid by excuses such as no money to pay damages. At that time, who would be hard? Of course it was us. In my opinion, the issues raised by the members of parliament even though it's good, a statement of 'insurance company is the fraudsters' is too much and shows immaturity of them as members of parliament.

The issue of late release of the accident claims is not the insurance company's isseu. It was a legal issue. Let say, if you are the innocent party and those who was violate you did not want to plead guilty, who is the party that the insurance should be claimed on? If you claim on your policy, then you will lose the NCD (Non Claim Discount) that you intended to save on your insurance premium next year. If both parties do not want to plead guilty, the case had to be brought to the court. Who would bear the costs of the court? You? Of course not. All the expenses will be bear on the insurance company who try to help you to save your NCD. The court will usually takes time and it is a normal process. Because of this, sometimes it will continues for years, but what you have to pay before, you can actually get money back from the insurance company.

For example, if your car is missing, the police will investigate, and after six (6) months and the car is not found, the case will be closed. After that the police will give permission to the insurance company to pay compensation. So, there is no reason that the claim is said to be slow.

In Malaysia, an understanding of insurance is still in early stage. Therefore, the discussions of the insurance issue should be continued. Do not be afraid to meet representatives of the insurance, just ask what you do not understand .. but not run from them! Now there are many good agents and some agents have the qualifications and integrity and should be respected. Many insurance agents now have a Masters and Doctorate in areas of legal and financial management. Try can keep in touch with them.

The question of where the money go if we never had claim? Have we asked ourselves, from where the money claim of thousands of dollars that we claim when we only pay RM300 for renewing the car insurance policy? Actually the money is coming from the common pool (insurance funds). All moneys will be taken from the pool. What we pay for it were included in the fund. Thus, it is important for insurance companies to ensure that there is money in the pool and the money should always be there for all of its members to ensure there is no problem for the claim. The premium paid was accompanied by a fair and just, and was named equitable premium. The owner who has expensive cars will pay a high premium where the premium charge for a cheap cars is low. For example, the owner of the new Proton Saga BLM 1.3, only need to pay an annual premium of RM600 while the BMW 5 Series 2.5 owners will have to pay more than RM 6,000 per year premium. This is what equittable premium is all about. If you did not claim earlier this year the premium money is always there for you that would claim the next year or for other car owners who need to claim.

Replying to the issue of car insurance rates that are going up, everything has been studied for ensuring that the common pool is sufficient to last the next few years. You can see in the newspaper or at the police station, the rate of accidents and claims much improved in recent years and during this time many insurance companies incur losses until there is to be closed or merged with another company to breathe because of the common pool had suffered a deficit. For example, Takaful Ikhlas has joined with Allianz Insurance Company earlier in this year.

Actually, the insurance rates today was set by the Bank Negara Malaysia, not the insurance company itself. So it is not appropriate if the insurance company to blame. Imagine all the insurance companies in Malaysia were closed, what about our fate? Who will help? Friends? Even our siblings may not able to help.

Third party insurance rates are high? You are right. In fact today, the first party insurance is cheaper. You will not believe. I could please calculate later. For example, a friend of mine has been to the post office to renew the third party insurance for the his old Proton Wira and he was charged at RM500. At that time he did come to me. I help him first thought of the same insurance coverage for only RM298. There was a gap right? Always ask the right people, not the people like us. In my opinion, the increase of third party insurance rate is only to educate the public. Actually, on these day, no one should select the third party policy. Because this type of insurance does not cover the owner's car itself. In the past when I have not learned about insurance, I had an accident. My car fell off the hill. Thank God I am safe but what about the car? Crushed, but it can not claim damages because the insurance protects only the third party. I had to use my own money, amounting to nearly RM4000.00 to fix the car myself. If I bought a first party insurance, I should just save it for my family expenses for the future. I should only need to add another RM100 when renewing insurance for my car. At least I have some money aside to face unexpected disasters like that. So, stay away from the third party insurance, care about your future.

In this life we have been more time to improve ourself. Maybe there are two ways to deal with rising insurance rates for this last.

First, drive a car with attitude. Improve your driving in a safe, less-tempered attitude and stop the reckless driving. Remind other people around you as well. Remember, drive without the attitude will definitely happen sooner or later an accident. Do not believe? Try it ..
Our responsibility is to reduce accidents and therefore, reduce the insurance rates.

Second, maybe we can co-added income such as other friends who have been successful. We are together to learn from them so we can deal with not only the increase in insurance rates, the actual increase in inflation rates and petrol prices are tens of times the impact of rising insurance rates.

Integrity Comes First!

Nur Amin Abdullah
Senior Consultant,
Etiqa Takaful Berhad
BBA (Hons.) Insurance, UiTM

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