Liberalisation of Motor Insurance – in a nutshell

Starting 1 July, Bank Negara lifted the tariff on motor insurance. Here’s the gist of it… 

1) Apa tu? (What does it mean?)

Insurance companies now have the freedom to tailor a wider range of products and determine premium prices accordingly.

For the consumer, this means that you might pay more or less, depending on whether the insurance companies deem you as a low- or high-risk driver.

2) Why fix what wasn’t broken?

Increased competition amongst insurance companies, thus, better and more innovative insurance packages for customers.

Also, it’s a more equitable approach for drivers to pay more or less, depending on their risk profile. It’s nothing new in more developed countries. Malaysia is just a little bit late in adopting it.

3) Will I pay more/less?

There are several factors that insurance companies will use to determine your risk profile and subsequent premium; ie. your age, gender, age of your car, past insurance claims and traffic offence records, etc.

You could* be paying MORE if you are/have:

  • Younger – deemed more reckless and inexperienced.
  • Male – also deemed more reckless as well as impatient; hey, that’s what studies in developed nations say, not us…
  • Driving an older car – assumed to be more faulty.
  • A history of violations and claims – past behaviours predict future ones.
  • Driving a car with lower safety rating.

*it’s really up to the insurance companies to determine the risk parameters.

4) Oh, except for Third Party Products…

Third Party products – ie. death/injury to third party and damage to other person’s property – will still be subject to tariff rates.

5) What do I have to do?

When the time comes to renew your motor insurance policy, you’ll have to do a lot more research to find the best package deal for you. Yes, it sounds like it will be time-consuming, but we expect new apps and services will become available to help you collate information and determine the best product for you.

6) Again, WHY?

Well, it’s supposed to encourage better and safer driving habits as well. Besides, we are a capitalistic country after all, so may the market force be with you. 


For more info, here’s the FAQs that the Persatuan Insurans Am Malaysia has put together.

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