MOTOR INSURANCE

MOTOR TARIFF GENERAL REGULATION NO. 33

- Promotional Gifts to Policyholder

The industry has agreed that the provision for Promotional Gifts to Policyholders under General Regulation No. 33 of the Motor Tariff be deleted to avoid an unhealthy competitive environment and add on to operating costs for motor insurance business.

With effect from 1^st July 2008, all forms of gifts and promotional items were prohibited under the Motor class of business. The prohibition was also extended to include any other parties or any special arrangements with any other parties by member companies to provide such gifts and promotional items. Members were however, allowed to continue providing Road Assistance Programs to their motor policyholders.

Extension for Compensation for Assessed Repair Time (CART) Benefits to Comprehensive Motor Policyholders

With effect from 15^th April 2009, the CART benefit extension will be available to comprehensive motor policyholders, whereby they can choose to purchase the CART extension with additional premium.

Under this extension of cover, policyholders can claim for loss of use of vehicle arising from an accident from their own insurers (without affecting the insured s right to make a claim from a third party insurer) and furthermore their no claim discount would not be affected.

The insured has the option to choose the maximum number of days (either 7, 14 or 21) and the amount per day (either RM 50, 100 or 200) for the coverage under the extension.

Introduction of On-line Knock-for-Knock (KfK) System

A working group on the review of the KfK Agreement is currently looking into an on-line enquiry system to expedite the KfK process and provide a real time response replacing the current manual process. The proposed system will include notification/ confirmation, KfK Approval, billings, transmission of documents as well as to generate useful reports such as an Aging report to enable analysis and the determination of benchmarks.

The working group is in the stage of identifying a suitable service provider to be appointed to develop the system.

Motor Insurance - Beyond Economic Repair (BER) Vehicles

As part of efforts to strengthen the process involving BER vehicles to deter cases of car theft, the industry has decided that, insurers and takaful operators should ensure that all repaired BER vehicles are sent to PUSPAKOM for inspection. The registration cards of such vehicles can only be released by the insurer or takaful operator upon receipt of certification from PUSPAKOM on the roadworthiness of the repaired vehicles.

PIAM Approved Repairers Scheme (PARS)

The total number of workshops approved as at 31^st December 2008 was 832 and their distribution in various states are as below:-

Following a review of PARS requirements, additional requirements have been imposed to enhance the standard of service, quality and professionalism of workshops as well as to protect consumer interests. Effective from 1st July 2008, PARS applicants must have minimum shareholders' funds of RM100,000/- in addition to the minimum paid up capital of RM50,000/-. Burglary Insurance is also required in addition to Fire Insurance and Public Liability Insurance with a limit of RM300,000 or as per Adjusters' recommendation, whichever is higher.

Comprehensive Study on Third Party Bodily Injury (TPBI) Claims Fraud

The National Insurance Claims Society (NICS) was commissioned to conduct the above-mentioned study in Malaysia. The aim of the project was to produce accurate information for insurers, intermediaries and supervisors so that the potential risk of fraud in the area of TPBI motor insurance claims could be identified and reduced as much as possible through the implementation of effective strategies to prevent, detect and remedy such frauds against insurers.

A Task Force comprising representatives from PIAM, NICS, Malaysian Takaful Association (MTA), Insurance Services Malaysia Berhad (ISM) and Association of Malaysian Loss Adjusters (AMLA) was formed to study the findings of the report and put forward their recommendations. The recommendations have been circulated to member companies for their views and feedback.

Recovery of Stolen Vehicles from Overseas

With close co-operation from the Royal Malaysia Police Interpol, the Association has been successful in vehicle recoveries from overseas as follows:-

Report of Recovered Stolen Vehicles from Polis DiRaja Malaysia, Bukit Aman

Since 8^th October 2007, PIAM has been receiving weekly reports of recovered stolen vehicles at the various police stations nationwide from Bukit Aman and this information is circulated immediately to member companies through the PIAM Circular Distribution System (CDS).

The prompt notification of such information by the Police is useful and effective as it aids in avoidance of the involvement of middlemen and quick actions can be taken by insurers to preserve the condition of the vehicle after recovery. PIAM is working with ISM and the police to improve the quality of the information received including the need to automate the matching process of the information received with the individual member company's record to quickly identify their respective insured vehicles.

Vehicle Theft Reduction Council of Malaysia Berhad (VTREC)

In the year under review two (2) Board meetings were held under the new chairmanship of YDH Tan Sri Ismail bin Haji Omar, Deputy Inspector-General of Police. Amongst the decisions taken were:

1. Invitation to PUSPAKOM Sdn Bhd to be a member of the Board for more effective representation.
   
   
2. Formation of a trust fund by PIAM for the management of the Theft Fund contributions from members of PIAM and MTA to VTREC.
   
   
3. Formation of a Working Committee consisting of various stakeholders and headed by a senior police officer from Bukit Aman.
   
   

The Working Committee is mandated to conduct various studies and make the necessary recommendations to the Board of Directors on 3 strategic areas. They are:-

a) Information exchange amongst stakeholders,

b) Procedure for domestic recoveries, and

c) Preventive measures on marketing of stolen vehicles.

Various meetings and discussions were held by the Working Committee with related government agencies (Ministry of Housing and Local Government), public sector organizations (Association of Banks in Malaysia, Association of Hire Purchase Companies of Malaysia, Association of Finance Companies of Malaysia, Malaysian Automotive Component Parts Manufacturers Association and Selangor & F.T. Engineering & Motor Parts Traders Association) and service providers (HeiTech Padu Bhd, Masterplan Sdn Bhd, DGKOM Sdn Bhd, Commitel Sdn Bhd, Web Power Sdn Bhd and M/s Tiburon Inc [USA]).

Some of the recommendations of the Working Committee have been considered by the Board and include:

1. Invitations to vehicle spare parts manufacturers and dealers, associations to the Working Committee,
   
   
2. Improving procedures relating to "Beyond Economic Repair" vehicles,
   
   
3. Installation of vehicle security systems and incentives from insurers,
   
   
4. System integration between police and JPJ systems, and
   
   
5. Dealings with third party recovery agents who merely sell information on recovered stolen vehicles was considered a contributory factor to corrupt practices and member companies have been advised not to deal with such agents.

VTREC is in the process of organizing a seminar in 2009 with speakers from the National Vehicle Theft Reduction Council of Australia, Motor Insurance Repair Research Centre (Thatcham) of United Kingdom and Hong Kong Police Force in order to share their experiences in combating the vehicle theft menace.

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