by Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjong, Lim Kit Siang, in Petaling Jaya on Friday, May 27, 1994:
Bank Negara had given inadequate notice on its intention to recommend the winding-up of Mercantile as not even one per cent of the Mercantile policyholders had terminated their policies in the past week
The disclosure by the Bank Negara appointee manager for Mercantile Insurance Sdn. Bhd. (MISB), Lim Tian Huat of Arthur Anderson & Co. that only about 2,500 of the 263,000 Mercantile Insurance policyholders had terminated their policies in the past week is most shocking. This works to less than one per cent of the total number of Mercantile Insurance policyholders.
This is clear proof that Bank Negara had given inadequate notice on its intention to recommend the winding up of Mercantile Insurance Sdn. Bhd. to the Finance Minister, Datuk Seri Anwar Ibrahim, if the Mercantile shareholders do not inject an additional capital of RM383.4 million within two weeks.
Lim Tian Huat said yesterday that Mercantile policyholders are taking a big risk by not terminating their policies and getting new coverage from other insurers.
He said Mercantile policyholders would face serious problems if they were involved in accidents or their property was broken into or destroyed by fire as payments may take several years once the liquidators took control of Mercantile’s assets after the Finance Minister issues the winding-up order.
It is clear that the overwhelming majority of the 263,000 Mercantile policyholders are not even aware of the dilem¬ma with regard to their insurance policies; for Bank Negara had given inadequate and improper notice.
To provide such proper and adequate notice, Bank Negara should mail a written notice to all the 263,000 Mercantile policyholders and give them at least one month to decide on their course of action.
Bank Negara is responsible to the 263,000 policyhold¬ers who bought or renewed insurance policies in the last 12, months with Mercantile Insurance despite Bank Negara’s take-over of the company in April 1991. This demonstrate their confidence, trust and faith in Bank Negara.
Bank Negara cannot reciprocate the confidence, trust and faith of the 263,000 policyholders with such shabby treat¬ment as not to honour dollar-to-dollar their claims, or even to give them proper and adequate notice about the proposed winding-¬up of Mercantile Insurance?
In this connection, I call on the new Bank Negara Governor who is also the new Director-General of Insurance to ensure that the 263,000 Mercantile policyholders are given proper and adequate notice, and that they should each receive a written notification.
Is Bank Negara now reneging even on its May 17 statement to pay 70 sen to a dollar to claims made after stoppage of business on May 18?
Another ‘shock’ in yesterday’s press conference is the announcement by Lim Tian Huat that Mercantile policyholders who meet with accidents after May 18 would only be entitled to 20 per cent of their claims – as compared to 70 per cent payment for claims lodged before May 18.
This is clearly at variance with the May 17 statement by Bank Negara which said: ‘All claims and insurance contract related fees lodged after the stoppage of payment will be proc¬essed and paid by the appointed liquidator, also at the rate of 70 sen to a dollar when the Act is amended.
Is Bank Negara reneging in ten short days its earlier statement of paying 70 sen to a dollar for claims on Mercantile policies whether made before or after May 18, 1994?
I have scrutinised the Bank Negara statement of May 17, and I cannot find anywhere this new figure of paying 20 sen to a dollar. There must be an immediate and full clarification from Bank Negara if public confidence in Bank Negara is not to be further shaken.
It is most regrettable “that Bank Negara has not responded to my suggestion that it should arrange for the 263,000 Mercantile Insurance policyholders to simultaneously buy new cover from other insurers at the same time they terminated their Mercantile Insurance policies.
Call on MCA.Gerakan and UMNO Ministers to raise in Cabinet the plight of the 263,000 Mercantile Insurance policyholders
Bank Negara and the Government must be held responsi¬ble for all the inconveniences, hardships and losses suffered by the 260,000 Mercantile Insurance policyholders caused by the liquidation of Mercantile
For this reason, I call on the MCA, Gerakan and even UMNO Ministers to raise this issue in next week’s Cabinet to ensure that Bank Negara assume its moral and legal responsibility to the 263,000 Mercantile policyholders by honouring dollar-to-dollar their policies.
It is unfortunate that at yesterday’s press conference, Lim Tian Huat did not explain why Mercantile Insurance, has suddenly become a case for liquidation when in 1992; it still topped all general insurance companies in the country in having the highest written premiums – totalling RM216 million.
Malaysians are still waiting for full explanation and accountability from Bank Negara that there was no way it could have ‘saved’ Mercantile Insurance from liquidation although in the second year of its take-over, Mercantile Insurance was still the leader of written premiums in the general industry.