Let’s say we have two drivers: Ali and Mat.

Ali is a responsible driver. His car is well-maintained. He adheres strictly to traffic rules and is considerate on the road. On the other hand, Mat is a notorious driver that agitates many on the street. He has broken nearly every single traffic rules written in the book and takes great pride in them. He is one who doesn’t give a damn about his life, your life, paying summons and the authorities.

Here’s a question.
Is it fair for Ali to pay the same rate as Mat for his motor insurance premiums/takaful contribution?

If you are an ‘Ali’, I believe it is logical for you to pay lower premiums. After all, why should low-risk drivers like Ali bear the same insurance charges as high-risk drivers like Mat?

Finally, It is Here …

Effective 1 July 2017, Bank Negara Malaysia (BNM) has commenced the liberalisation of motor insurance/takaful. What does it mean?

Before this, charges on motor insurance and motor takaful were tariffed where prices were fixed and controlled by the government. The motor tariff was calculated based on a car’s model, its age, and its engine capacity. Thus, Ali and Mat were paying same rates for their motor insurance/takaful regardless of their driving behaviour and the actual condition of their vehicles.

Today, insurers and takaful operators are allowed to set individual prices for their motor insurance and motor takaful products. As such, it is possible for Ali now to enjoy better rates than Mat for his motor insurance premiums/takaful contributions.

Wait a Minute!

If all insurers/takaful operators are allowed to set prices for their motor insurance/takaful products, wouldn’t they increase charges to maximize profits? If so, how would it be better for drivers like Ali?

Today, there are more than 20 general insurers and takaful operators in Malaysia. The detariffication enables individual insurers/takaful operators to adopt different methods of assessing risks and thus, would result in different prices for their motor insurance/takaful products respectively.

In general, insurers/takaful operators now would determine premiums/takaful contributions based on a broader spectrum of risk factors. In addition to a car’s model and its age, they may assess risks based on the driver’s age, gender, his driving experiences and behaviour, vehicle maintenance, safety features of his vehicles and his claim records.

As such, insurers/takaful operators would be able to identify who is a low-risk driver like Ali from a high-risk driver like Mat. Depending on its commercial decisions, an insurer/takaful operator may choose to offer lower premiums/takaful contributions to attract customers like Ali and charges higher premiums/takaful contributions to customers like Mat as he is more prone to claims than Ali. Thus, a fairer pricing model on motor insurance/takaful products would be achieved.

How to Get Better Rates for Your Motor Insurance Premiums and Your Motor Takaful Contributions?

In this article, I’ll share 3 simple methods that you can apply immediately to improve your chances of getting better rates for your next motor insurance premium/takaful contributions. They include:

Method #1: Drive Responsibly like Ali

Personally, I believe the detariffication of motor insurance/takaful is a movement to convert more ‘Mat’s into ‘Ali’s so that we can create a much safer driving environment for all on Malaysian roads.

For instance, if you maintain a good driving record, it would be cheaper for you to renew your motor insurance/takaful as you are viewed to be of lower risk. Also, you are entitled to enjoy the no claim discount (NCD) which remains unchanged after the commencement of the motor detariffication. As such, I’ll list down a few good driving habits that all should follow to reduce your risk of road accidents:

– Don’t Whatsapp when you drive.
– Don’t try to Beat the Traffic Light when it turns Red.
– Use your Indicators when attempting to Switch Lanes.
– Abide by the Designated Speed Limit.
– Avoid Tailgating.
– Park at Safe Areas.
– Don’t Practise Double-Parking.
– Avoid Road Rage.

Remember. Today, you are now incentivised to drive safely. Even if you are not, beyond dollars and cents, you are still responsible for your own life and many precious lives around you. So, please be considerate.

Method #2: Maintain Your Vehicle Regularly

Regrettably, it is still common for drivers to drive their vehicles as long as they are movable. Perhaps, it stems from a driver’s ignorance or a lack of finances to pay for car maintenances. In both cases, it is inconsiderate to drive a vehicle that is not kept in its best condition as you are endangering yourself, your passengers and other road users.

Thus, it is advisable for you to send your car for servicing according to its schedule. A well-maintained vehicle helps to build your profile as a low-risk driver. In addition, you may choose to go the extra mile by installing certified anti-theft devices and car telematics. These initiatives are helping to improve your driver’s profile as insurers and takaful operators are factoring in car theft and existence of a vehicle’s security features when assessing motor insurance/takaful risk.

Method #3: Shop Around

Before 1 July 2017, there was no point shopping around as motor insurance and motor takaful was tariffed.

Today, insurers and takaful operators are allowed to improve on their existing product offerings, introduce new products with innovative features and set competitive prices to fight for consumers’ dollars. As such, it is advisable for you to take time to shop around for the most suitable deal based on your current needs.

So, where do I start? Which insurance company/takaful operators should I go for?

Here, I’ll share two links that are helpful for you to start shopping for a suitable motor insurance/takaful products. They are:

Persatuan Insurans Am Malaysia (PIAM)
Link: PIAM – Motor Product Selector (General Insurers Only)

Malaysian Takaful Association (MTA)
Link: MTA – Motor Product Selector (Takaful Operators Only)

Also, we’ve produced a simple video to demonstrate how you can easily request for motor insurance/takaful quotations from your preferred insurers and takaful operators.

Let’s strive to be a responsible driver and make the street a safer place for everyone.


Personal finance author and trainer

    1 Response to "Three Things You Can Do Now to Enjoy Better Rates on Your Motor Insurance Premiums and Motor Takaful Contributions"

    • Edi

      that is a good points , I found some helpful tools to also choose my motor insurance plan , which is compare for you all the plan you interested on and let you choose the best for you https://qompanion.my/car-insurance , I would like to find similar tool for medical and health insurance in Malaysia, but i couldn’t find , any one have any idea about tools for medical and health insurance

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