Proportional premium for cars gets nod
Post date: Oct 15, 2009 6:16:57 AM
Allianz M’sia: Proposed policy will help fight car thefts Tuesday March 23, 2010 By Laalitha Hunt
PETALING JAYA: The proposal for a Proportional Insurance Premium policy by the Home Ministry, where car owners who install additional security features are charged lower insurance premiums, will help reduce losses through vehicle thefts, said Allianz General Insurance Company (Malaysia) Bhd chief executive officer Ng Hang Ming.
A flexible tariff structure to reward or penalise certain design features and drivers’ behaviour is necessary in fighting vehicle thefts, he said, citing research findings of Hartmuth Wolff, an authority on vehicle security issues and theft prevention with German-based Allianz Centre for Technology.
“Thus, through our German experience, we believe that there should be consideration in imposing a loss excess on vehicles that do not have any approved anti-theft device fitted,” he told StarBiz.
Ng Hang Ming says the challenge is not so much on determining the premium rate but rather what device or system should be made eligible for the premium discount
Early this year, Home Minister Datuk Seri Hishammuddin Tun Hussein proposed that owners of vehicles with security systems would enjoy lower insurance premiums than those without security systems.
The Home Minister had said that Bank Negara Malaysia, together with General Insurance Association of Malaysia (PIAM), would discuss and fix the Proportional Insurance Premium Policy, while the insurance tariff would be prepared by Bank Negara.
“Although this may not be the first time the idea was suggested, we feel it is a very good idea to help car owners in safeguarding their vehicles from theft,” Ng said.
He noted that many car owners believed that basic factory-fitted security devices such as a mechanical lock or a simple immobilizer would do the trick to prevent car theft.
“However, these tools may not be effective enough to prevent their vehicles from being stolen, so car owners are encouraged to install advanced electronic immobilizer and/or a Global Positioning System tracking system instead,” Ng said, adding that while this might incur additional costs, car owners would enjoy lower premium payments and significantly reduce the chances of car theft.
Insurers such as Allianz General, for instance, offer customers optional added protection for policy holders with with anti-theft car devices.
“These prevention methods have helped improve our recovery rate of private cars over the last two years. With this method practiced widely by the industry, in the long run, we believe that it will not only help customers to retrieve their cars but will also help curb the escalating trend of vehicle theft in Malaysia,” he said.
On problems arising from the implementation of different premium rates, Ng said the challenge was not so much on determining the premium rate but rather what device or system should be made eligible for the premium discount.
“Many of the vehicles stolen already have some kind of security system or have been fitted with an additional security system later, however, their effectiveness in preventing vehicle theft is highly questionable,” he noted, adding that customers might not be aware about this matter and needed to be educated on this issue.
Ensuring a smooth implementation process for the new auto insurance policy will require the consolidated efforts of the insurance industry, car manufacturers, Bank Negara, the police and customers, according to Ng.