Motor Insurance to cost more starting 2012?

Last year, Malaysia Automobile Association (MAA) reported a record number of cars sold. Are you one of them? If you're not in that statistic yet and planning to own a new car now, please read this post which could scare you away.

In fact, petrol prices are heading up again since 2008 with prices of RON97 reviewing monthly. Without failed, the price of RON97 is going up consecutively for the past few months. Anyway, are you driving fuel-efficiency car like me? Despite that I am pumping RON95 petrol and driving the so called "fuel-efficiency" car, I still feel the pain of pumping money.

Source: Malaysia Automobile Association

What to do?

If you don't eat, your car still have to "drink" ma. Uncertainties in Middle East is already spiking up oil prices globally. You think this is the worst for motorists like us?

By "pouring oil on fire" (to make things even worse), government plans to gradually increase motor insurance premiums from 2012 onwards under the new motor insurance framework to be prepared by Bank Negara Malaysia (BNM).

How much more?

Up by between 250% to 450%?

Bank Negara assistant governor citing it totally incorrect. He said the premiums increases would be gradual, and spread over 4 years. See chart below for illustration made. Please take note that the increase will depends on vehicle's age and motorist's history of claims.

www.financemalaysia.blogspot.com

Why we need the new framework?

1. This is the 1st revision since 1978
2. Government plan to do away with tariffs for motor insurance business in 2016
3. Insurance companies are crying over high claim costs which make their business unprofitable

On the flip side, the new scheme would see improvements in the overall delivery system including addressing issues relating to affordability and accessibility to Malaysian Motor Insurance Pool cover. Hence, it could significantly reduce claims settlement period to between 6 - 18 months from more than a year currently.

According to Bank Negara, the motor insurance business incurred an estimated annual loss of RM650 million as at 2009/2010, which means the motor insurance business is unsustainable if we don't act now.

Related posts:

1. Proton loves Perodua to avoid extinction?
2. Fraudulent Insurance Claims and YOU

Insurance: Importance of Nomination (Part 2)

In Part 1, we have discussed the importance of nomination in insurance. But, what happens if it is someone else, like an uncle, niece or even a friend was named as nominee(s)?

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When a nominee is not automatically a beneficiary

Under a non-Muslim's policy, the nominee in such a case is not entitled to the policy monies as a beneficiary. He or she only receives them as an executor, and must pass it on to the deceased's estate to be distributed according to the will.

1. If there is a will, but the nominee in this case is not named as a beneficiary under the will, he or she will not get a single sen.
2. If there is no will, then the property will be distributed according to the existing laws of distribution.

What if I named my siblings (brother or sister) as a nominee?

Well, it will form as a trust policy, and your siblings will act as an executor instead. So, please take note. Anyway, you can change your nomination, but must sought the consent from your said siblings who is a trustee in this case.

The lesson here is that if your intended beneficiary is not a spouse, child or parent, then you must write a will naming that person as a beneficiary. Once you do, your nominee will receive the policy monies subject to the laws of distribution -- once all your estate's debts have been settled.

When to nominate?

Of course, the sooner the better. I would suggest you did it when you fill-in the proposal forms. Or else, you may nominate after the application or after you get the policy.

Can I name more than one nominee?

Yes, you can. Normally, you can name up to 4 nominees in a policy. But, you should state the proportion to which each person is entitled. Otherwise, each will receives an equal share.

Can I change my nominee(s)?

You can make any changes on your nomination anytime as you like. There is no restriction on the number of changes. The latest nomination will supersede all previous nomination. A nomination will also be considered revoked upon the demise of nominee, or all of the nominees (if more than one nominee), during the lifetime of policy owner. However, in the case of a trust policy, a nomination cannot be revoked without the written consent of the trustee.

What is the nomination procedures?

1. Fill in nomination form:
•  It usually requires details of your nominee's name, date of birth, NRIC, and address
2. Witness
• It must be signed by a witness who is above 18 years old, of sound mind, and who is not named as one of your nominee
• Alternatively, your insurance agent can be the witness
3. Endorsement
• Ensure that your insurance company endorses the nomination
• For new policy, it is written in you policy document
• For existing policy, make sure you receives a letter highlighting any changes to your nomination

Source: Life Insurance Association of Malaysia (LIAM)

Related Posts:

Insurance: Importance of Nomination (Part 1)

Fraudulent Insurance Claims and YOU

Recently, theStar highlighting a serious issue pertaining to insurance claims - Fraud Claims. It even started with staggering paragraph "Fingers have been chopped off, medical ailments exaggerated and even death faked - all for the purpose of fraudulent insurance claims".

Among the issues:

• RM500 mil in bogus insurance claims are detected each year
• At least 2 insurance firms have folded as a result of high compensation claims compounded by fraud
• Insurance firms fight back by setting up special fraud detection units

Regarding to this topic, Finance Malaysia would like to shares some views here pertaining to the effects on Malaysians as a whole. And, most importantly, the impact of insurer would definitely pass it to people insured. Why I said so?

First, you must understand how insurance companies compute their premiums charged to each clients. If the insurer is financially stronger, it may charged a lower premium for the same amount of coverage on its policies. In other words, if an insurer is facing financial problems, it may raised its premium charged, even to their existing loyal customers.

If your friend is making a fraud case, let it be?

For example, one of your friend is making fraud claims by collaborating with a particular doctor and agent to issue a false physician statement. Subsequently, your friend could received compensation from insurance company based on that statement. Of course, you can closed one eye and let it be. But, your inaction would lead to higher claim amount being paid by that insurance company for the wrong reasons. If those act was rampant everywhere, insurance companies could raised its premium imposed. So luckily, if you're insured by the same company, you could be a victim of your friend's unlawful act.

Supposedly, we should advise whoever out there to stop making fraud claims as it may abuse the whole insurance systems. Objective of getting an insurance is to transfer our risk to third party, hoping that we could financially went through unfortunate events which may happened,  NOT to gain from an insurance.

Think about this:

What is the purpose of insurance?

Protection or Investment?