By Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjung, Lim Kit Siang, in Petaling Jaya on Thursday, 9th June 1994:
Liong Sik’s undertaking to raise in Cabinet next Wednesday the motor insurance crisis welcomed although I had asked him to raise it yesterday
I welcome the undertaking given by the Transport Minister, Datuk Dr.Ling Liong Sik to raise in Cabinet next Wednesday the motor insurance crisis, although I had ashed him to raise it in the Cabinet yesterday.
The Bank Negara decision on May 17 to stop all Mercantile Insurance Sdn. Bhd. business and suspend its payments has not only affected the 263,000 Mercantile policyholders and 40,000 claimants, but also precipitated a motor insurance crisis.
This motor insurance crisis blew open when Kurnia Insurance (Malaysia) Bhd. refused from June 1 to accept policy coverage for vehicles over 10 years old and commercial vehicles over five years old, and Bank Negara as the regulator of the insurance industry refused to intervene to protect the interests of the motoring public.
Can the Minister of Transport and Sank Negara imagine the chaos in the country when other insurance companies follow Kurnia Insurance (M) Bhd. in refusing to insure vehicles over 10 years old and commercial vehicles over five years old?
Bank Negara is being irresponsible in refusing to intervene in the arbitrary Kurnia Insurance guideline, and is in fact failing in its responsibility as Director-General of Insurance to oversee the insurance industry to protect the interests of the motoring public.
The Bank Negara’s latest report on the insurance industry, in the form of the 1993 Annual Report of the Director-General of Insurance which was made public in March this year, said:
“As the regulatory authority, guided by the objectives of the protection of policyholders and the sound orderly growth of the insurance industry as an important component of the financial system, Bank Negara Malaysia continued to introduce measures for the improvement of the industry. The measures introduced since the Bank took over the supervision of the insurance industry in 1988 had instilled greater public accountability and financial discipline within the industry, as well as raised the level of professionalism in services to the public. The industry is on a much sounder financial footing today than it was five years ago, and ready to take 6n new challenges to support the sustained strong growth of the Malaysian economy.”
If the motor insurance industry “is on a much sounder financial footing today than it was five years ago” as a result of Bank Negara’s take-over of the insurance industry, with more professionalism in services to the public and greater accountability, how could owners of vehicles over ten years old and commercial vehicles over five years old be left in the lurch in unable to get ordinary motor insurance coverage?
Bank Negara should direct Kurnia Insurance (M) Sdn. Bhd. to suspend its new underwriting guide-line not to accept insurance cover for vehicles over 10 years old
It is no answer that such motor-vehicle owners can go for the High Risk Motor Insurance Pool at the General Insurance Association of Malaysia (PIAH).
Why should Kurnia Insurance (M) Sdn. Bhd. or any other insurance companies be given the power to unilaterally and arbitrarily decide that all vehicles over ten years old and all commercial vehicles over five years old are ‘high risk’ vehicles?
If insurance companies have such powers, then in future, they could decide anytime not to give insurance cover to vehicles over five years old and commercial vehicles over three years old, unless very ‘high-risk premiums’ are paid!
Bank Negara should direct Kurnia Insurance (M.) Sdn. Bhd. to suspend its new underwriting guideline not to accept insurance cover for vehicles over 10 years old and commercial vehicles over five years old, and to warn all other motor insurance companies not to adopt such a underwriting guideline, until Bank Negara has come out with a new Policy Guideline on High Risk Motor Insurance.
Meanwhile, as Tranport Minister, Liong Sik should hold meetings with all those affected by the motor insurance crisis in the country, so that the Cabinet next week could be asked to adopt concrete and specific measures to protect the interests of the motoring public and to ensure that all the six million vehicles on the roads have adequate insurance policy protection.