KUALA LUMPUR, March 1 — The Malaysia Competition Commission’s (MyCC) proposed decision against the General Insurance Association of Malaysia (Piam) will severely impact consumer interest, says Bank Negara Malaysia (BNM).
BNM today issued a statement in response to MyCC’s proposed financial penalty against the association and its members, with regards to an agreement between Piam and the Federation of Automobile Workshop Owners’ Association of Malaysia (FAWOAM) on agreed discount rate for motor parts prices and labour rate for repairs of motor vehicles involved in an accident.
The arrangement was put in place in response to a clear directive from the central bank to general insurers in 2011 to address disputes between workshops and general insurance companies over insurance claim payments for motor repairs.
Prior to the arrangement, such disputes had given rise to protracted delays in repairs and caused significant inconvenience to consumers whereby as a result, BNM received more than 500 complaints of this nature in 2011 alone.
“Such complaints have now been reduced by 50 per cent,” it said.
Furthermore, the central bank said the arrangement was necessary to reflect reasonable costs of repairs in an environment where motor insurance premiums are regulated by a tariff.
Measures were currently being taken by BNM to gradually liberalise motor insurance tariffs to promote a more competitive motor insurance market while ensuring affordable motor insurance premiums in the long-term.
The central bank said without appropriate arrangements to control inflated and fraudulent claims, these objectives would be severely undermined.
“BNM firmly believes that public interest is best served by continued progress on the reforms in the motor insurance market.
“The central bank will continue to pursue a resolution of this matter in the best interest of the general public,” it added. — Bernama
