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KUALA LUMPUR, Dec 31 — Despite Putrajaya’s argument, Malaysia’s insurance regulator has confirmed insurance firms will not be absolved of liability in paying out compensation for flood claims filed if a state of emergency were declared.
The General Insurance Association of Malaysia (Piam) said its member companies must process the claims so long as flood is an “insured peril”.
While standard motor and fire insurance policies exclude coverage against losses caused by natural catastrophes, PIAM said that the option to cover disasters like earthquakes, tsunamis and typhoons, cover for flood-related loss or damage, can be purchased as an extension to the policies.
“All policyholders, both businesses and individuals, located at the flood-stricken areas are therefore advised to check their fire and motor policies to determine whether they are covered for loss or damage resulting from the floods,” Piam, which is made up of 29 insurance firms, said in a statement emailed today.
“Piam would like to advise the public to review their insurance policies with their insurers or insurance agents to establish if the cover provided is sufficient to mitigate any serious financial impact due to flood losses and damages,” it said.
Similarly, it also said businesses are also advised to take up insurance products to protect themselves and their businesses against such losses.
Despite the massive flooding that has so now forced over 200,000 Malaysians from their homes in six states in the peninsula, Prime Minister Datuk Seri Najib Razak said on Saturday that there was no need to declare an emergency.
“If the government announces an emergency, the implications that will arise include the insurance companies being absolved from paying compensation... and compensation arising from damages to property and vehicles is enormous.
“That’s why if we declare (an emergency), this means it includes the ‘force majeure’ category, and insurance companies need not pay compensation (in this case),” Najib was quoted saying in a later news report by Bernama.
The remarks drew flak from opposition politicians and civil society groups alike compelling Putrajaya to consider declaring an emergency to enable the mobilisation of the entire government machinery to mitigate the disaster.
Piam had previously given its assurance that all the insurance companies registered with the body is committed to offer assistance to all flood victims, including allowing an instalment of payment of annual premiums and by expediting the settlement of claims made by policyholders.
“In the case of larger claims which may require longer processing time, considerations would be given to allow for interim payments of a certain percentage of the total estimated loss pending full settlement later,” said the regulators.