WORLD INSURANCE NEWS

HIGH ACCIDENT RATE HURTING GENERAL INSURERS, SAYS PIAM

THE General Insurance Association of Malaysia (Piam) said the high rate of accidents in the country was hurting general insurers.

Last year, Road Safety Council's statistics showed that there were 223,116 road accidents recorded involving 331,860 vehicles, which translated into 611 accidents per day or about 25 accidents an hour and at least 909 vehicles getting into accidents every single day.

In 1999 alone, general insurers paid out RM1.67bil or an average of RM4.6mil a day on motor claims, out of the total gross premiums of RM2.78bil collected in that year, Piam said in a statement yesterday.

Piam executive director Lim Chia Fook said the picture might look rosy to the public but after including the commissions of RM249mil to intermediaries and insurers' own management expenses of RM520mil, the scenario changed dramatically.

Lim said: "For every ringgit earned from motor insurance in 1999, insurers expended RM1.01 to pay for claims and cost of acquiring and managing the business. This figure has deteriorated further to RM1.05 for every ringgit earned by June 2000.''

Piam said despite the reduction in the accident rates in the last couple of years following the successful implementation of the National Road Safety Council's multimedia campaigns in 1997, claims paid out by insurers continued to rise.

According to Bank Negara Malaysia's statistics, the average per claim paid by insurers for physical damage to vehicles has continued to surge its upward trend to RM4,293 in 1998 from RM3,846 in 1995.

Piam said the increasing numbers and cost of road accidents would only push insurance premium up and the sheer numbers of road accidents on Malaysian roads was a terrible "economic waste'' to the nation as a whole.

Piam said it had adopted a single central parts and repair database in its move to minimise the subjectivity in repair estimation and claims approval, that would help standardise labour, repair times and pricing.

In addition, submission of reports and images of accident vehicles could be done electronically and approvals to start repair work could be issued almost immediately after the workshop communicates electronically with the insurer.

Lim also said: "Moreover, Piam will work closely with Bank Negara to establish a greater level of co-operation with relevant authorities such as the Police, Road Transport Department and the Ministry of Domestic Trade and Consumer Affairs (responsible for licensing motor repairs) in order to set up an effective national anti-fraud network.''

At the same time, the association was exploring other distribution channels of its products and services beyond the over reliance on the agency force, in order to improve cost-effectiveness and efficiency.

Source : Bernama in The Star, 8 December 2000Re