by Parliamentary Opposition Leader, DAP Secretary-General and MP for Tanjung, Lim Kit Siang, in Petaling Jaya on Monday, June 27, 1994:
Bank Negara should publicly identify the seven insurance companies which have refused to provide insurance cover for old vehicles
Bank Negara has confirmed that there are seven insurance companies which have refused to give insurance cover for old vehicles – four for commercial vehicles over five years old and three for any vehicles over 10 years old.
Bank Negara should publicly identify the seven insurance companies and give satisfactory explanation why Bank Negara has allowed these seven insurance companies to unilaterally reject insurance cover for old vehicles.
If these seven companies can unilaterally reject insurance cover for old vehicles, then the other insurance companies can easily follow suit and reject insurance coverage for old vehicles or impose unreasonable and oppressive conditions.
Unless the Government bans the use of vehicles over 10 years old, Bank Negara must ensure that no insurance company is allowed to unilaterally reject insurance coverage for these old vehicles.
My first parliamentary question for next month’s Parliamentary meeting beginning on July 4 will be on the motor insurance crisis, which is as follows:
“To ask the Finance Minister how successful has been Bank Negara in revamping the motor insurance business to ensure healthy development of motor insurance industry since it took over as the regulatory authority of the insurance industry in 1988, and whether the proposal to wind up Mercantile Insurance Sdn. Bhd. three years after Bank Negara had taken over the company represents a failure of Bank Negara Governor as Director-General of Insurance.”
The Finance Minister, Datuk Seri Anwar Ibrahim should give a full report to Parliament on the motor insurance crisis in the country, both with regard to the difficulties faced by owners of old vehicles to get insurance coverage, but also with regard to Bank Negara’ s stewardship of Mercantile Insurance Sdn. Bhd.
When Bank Negara took over Mercantile Insurance Sdn. End. in March 1991, Mercantile was the ‘king’ of motor insurance, with 800,000 policyholders but it had a solvency deficiency of RM556.2 million.
Who had been responsible for this colossal RM556.2 million solvency deficiency in Mercantile Insurance Sdn. Bhd?
This is another mega-financial scandal in Malaysia in the past few years – eclipsed only by Bank Negara’s RM30 billion forex losses scandal.
At the time of the take-over of Mercantile Insurance Sdn, Bhd., Bank Negara revealed that four Mercantile executives were being investigated on charges of mismanagement and claims of irregularities. More than three years have passed and Bank Negara is proposing to the Finance Minister the winding-up of Mercantile Insurance Sdn. Bhd, but no action has been taken by Bank Negara against anyone for the RM556.2 million solvency deficiency by Mercantile Insurance.
Is this because the Chairman of Mercantile Insurance Sdn. Bhd. was a former MCA Deputy Minister just before the Bank Negara take-over?
DAP will expect an answer latest by July 4 why Bank Negara had not taken any action against anyone for the colossal RM556.2 million scandal in Mercantile Insurance Sdn. Bhd., while the millions of vehicle-owners are now being penalised to an extent that Malaysia must have the most number of vehicles on the roads without insurance coverage in the history of Malaysia.