Commenting On Current & Past Issues On Insurance Accident Claims Experienced In Malaysia And Its Region & Also Interesting Topics Related To Mankind.
Wednesday, May 11, 2011
Motor cover directive
Kuala Lumpur: Bank Negara Malaysia (BNM) wants all composite takaful operators to offer motor insurance coverage within the next three months, sources said.
In a meeting with eight composite takaful companies last Friday, BNM said motor insurance cover must be provided by all operators or they could risk losing their operating licence.
It is learnt that out of the eight, only four provide motor insurance coverage.
BNM wants all general takaful companies to come into the Malaysian Motor Insurance Pool (MMIP) to create a level playing field with their conventional insurance counterparts, the sources said.
"In the meantime, efforts would be made to amend all the necessary documents to make sure the MMIP pool is syariah-compliant," an executive at a takaful company told Business Times.
MMIP is a high-risk insurance pool that runs collectively by the insurance industry under the orders from the regulators.
BNM has asked The Malaysia Takaful Association (MTA), the local umbrella body for takaful operators, to set up a task force to work its syariah committee.
"Once the MMIP is syariah-compliant, all general takaful players cannot refuse to offer motor cover, including those displaced or old vehicles," the executive said.
The four that offer motor insurance are Etiqa Takaful Bhd, Takaful Ikhlas Sdn Bhd, Syarikat Takaful Malaysia Bhd and MAA Takaful Bhd.
The other four takaful companies that have yet to offer motor coverage are CIMB Aviva Takaful Bhd, Hong Leong MSIG Takaful Bhd, HSBC Amanah Takaful (M) Sdn Bhd and Prudential BSN Takaful Bhd.
Another source said takaful operators are distancing themselves from offering motor coverage as it is an unprofitable business.
"Just like the conventional side, motor is considered bad business with high claims," he said.
Last week, BNM made it compulsory for all conventional general insurers to provide motor insurance for displaced vehicles to ensure that all motorists will obtain access to motor cover.
As a result, general insurers are forced to sell motor cover through the MMIP irrespective of the vehicle's age and claims experience and share the losses.
Takaful operators, on the other hand, have argued that MMIP is non-syariah-compliant since it is a high-risk insurance pool that runs collectively by conventional insurers under the directive of the regulators.
With the entry of the eight takaful companies, the MMIP pool will rise to 38 companies from the current 30.