Bank Negara: Consumers to benefit from premium rebates

KUALA LUMPUR: Bank Negara’s move to implement premium rebates for the direct purchase of general insurance covers is expected to put millions back into consumers’ pockets, especially during these challenging times.

Deputy governor Datuk Mohd Razif Abd Kadir said the objective was in line with the Government’s intention of enhancing consumption.

“This is something that is fair for consumers. Over time, you cannot stop this kind of innovation taking place,” he told a briefing yesterday.

Hence, effective July 1, individuals who purchase general insurance covers directly from insurance companies will be eligible to receive premium rebates. The quantum of rebate, however, will depend on the types of insurance purchased.

For motor insurance, individuals will receive a 5% premium rebate in the first year of implementation and 10% thereafter. For others, the rebates are between 5% and 25%.

Direct purchase includes walk-in, through the Internet, direct mailing and the telemarketing channel.

Razif noted that in 2008, the general insurance policy premium amounted to RM4.4bil, of which half was motor insurance and 15%, or RM450mil, came from direct channels, but without getting any rebate.

“Now, individual consumers would benefit from the rebate,” Mohd Razif said, adding that despite the emergence of direct distribution channels, insurance agents remained an important intermediary in the general insurance sector to provide personalised service for the convenience of policy owners as well as value-added services, such as advice on insurance products and in providing assistance in claims handling.

“Customers have the option to use the services of agents to meet their insurance requirements, particularly for complex and sophisticated insurance products,” he said.

This, together with the higher value-added services, would provide greater scope for agents to widen their services to include financial advisory to their clients, he noted.

“Financial advisory services is an area that has tremendous growth opportunities,” he said.

Meanwhile, talks were still ongoing with insurance companies on their proposal to raise motor premiums due to rising motor claims and increasing costs of automotive repair, according to Razif.

“It is a sensitive issue and still pending as tariffs for motor insurance have not been amended since 1978,” he added.