Cheaper to renew directly if premiums are raised

PETALING JAYA: Policyholders will be able to buy or renew their motor insurance policies directly with insurance companies at a discount if the proposal by insurance companies to raise motor premiums is approved, according to industry sources.

It is learnt that Bank Negara is in discussion with motor insurance players and has requested them to provide discounts if it decides to approve a hike in motor insurance premiums as requested by the industry due to rising motor insurance claims.

A 30-year veteran of the insurance industry told StarBiz the move would allow policyholders an option to either walk in and buy directly over the counter at a discount from insurers or they could buy through their agents, whereby they would have to pay a 10% commission.

Subject to approval from the central bank, the rate of discount being studied at the moment is 5% in the first year and 10% in the second year and thereafter, in addition to benefits like the no claims bonus (NCB), according to the source.

The first year discount is limited to new motor policies and the subsequent ones are for renewals, he added.

The General Insurance Association of Malaysia (PIAM) has declined to comment on the matter.

Insurers had been persistently asking Bank Negara to raise motor premiums since the last one took effect in 1978, citing higher motor claims, surging vehicle thefts and the rising cost of automotive repairs.

Federation of Malaysian Consumer Association secretary-general and chief executive Muhammad Sha’ani Abdullah said the move to allow consumers to buy motor policies over the counter was laudable as it would eliminate abuses by agents.

“Many people buying or renewing motor or non-motor policies are forced by their agents to buy other general insurance products which are unrelated. “This is something which we view as an abuse by agents and (it is) forced selling.

“We support this proposal as it will benefit consumers and check the growing abuses by agents,’’ Muhammad Sha’ani said.

But the industry source said the move to allow customers to buy motor insurance policies directly at a discount from insurance companies would affect the income of agents and their staff.

“There are about 40,000 general insurance agents in the country, of which 15,000 are full-time agents.

“On average, each agent or agency employs between three and 30 people.

“By allowing customers to buy or renew motor policies at a discount, it will erode the income of more than 50,000 employees of insurance agents, which will cause them to be unemployed,” he said.

An agent who declined to be named said agents helped in the penetration of insurance in remote and rural areas where there were limited insurance branches.

“Apart from selling insurance, we also provide claims management and monitoring of claims on behalf of customers.

“Unless the central bank has specific plans to redeploy the unemployed staff, it is going to worsen the current economic situation,” he said.

Some of the leading motor insurance insurers in the country are Kurnia Insurans (with a market share of more than 20%), AmAssurance, Allianz Malaysia Bhd and Tokio Marine.

Allianz General Insurance Company (M) Bhd chief executive Ng Hang Ming said in an e-mail reply that his company had “not received any directive to revise motor premiums upwards.”

“To date, we have not received any directive on this issue of rebate to direct customers. In respect of commission to agents, it still remains unchanged at 10%,’’ Ng said.




what are we agent going to eat? common man there are 40k agents in the country... do they plan to just rethrech them like this? and 15k of them like me are full time agents... phew... sob2...

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Added on May 19, 2009, 12:01 pmPETALING JAYA: Come July 1, car owners who buy motor insurance directly from insurance companies without using the services of an agent will qualify for mandatory rebates, a move that could render agents redundant.

The move would see new customers being given a 5% rebate on their insurance if they buy it via channels such as the Internet, telemarketing, direct mailing or by walking into the insurance company. These customers would also get a 10% rebate for renewals in the second year.

In a circular sent to the General Insurance Association of Malaysia (PIAM) dated April 17, Bank Negara said the rebates would only apply to actual owners of the vehicles.

The circular added that Bank Negara had “no objections” to PIAM’s proposal for the mandatory rebates. This is understood to mean that the move would more likely be implemented than not.

Veteran insurance agent Hardyal Singh hit out at PIAM, saying the association did not take the views of 40,000 agents (15,000 of them full-time) into consideration.

“It will clearly affect the livelihood of the agents. Full-time agents hire at least three to 30 employees at their agencies and these people will also be affected.

“Our main source of income is the 10% commission, so the 10% rebate is actually our commission being given to the customer. It offers no benefit to the insurance company but instead creates a socio-economic crisis by making people jobless.”

Hardyal, who was formerly Perak General Insurance Agents Association president, said he would be forming an ad hoc committee with some larger agents in Kuala Lumpur to speak out more on the matter.

It is understood that the circular was the outcome of correspondence and meetings between PIAM and Bank Negara on the association’s proposals towards self-regulation of the industry.

In the circular, the central bank said the rationale for mandatory rebates was to “promote the promulgation of alternative channels of distribution so as to increase the penetration of insurance to the masses”.

An industry source said the industry was heavily regulated, especially towards the ability of insurance companies to reward agents, and that PIAM’s proposals were for Bank Negara to allow some self-regulation.

“When Bank Negara came back to the table, it seemed that they were saying if insurance companies were willing to reward agents, then they could also provide this benefit to policyholders.”

The source added that the central bank’s move could be seen as a way to reduce the number of part-time agents but said full-time agents would now have to work harder and think up new ways to get business.

Consumer advocate Billy Toh said he was strongly against the move as he felt that agents could still play a role by explaining the insurance policy details to customers.

However, Federation of Malaysian Consumers Association secretary-general Muhammad Sha’ani Abdullah said “the move would reduce the opportunity for agents who try to get customers to buy other types of insurance together with motor insurance.”

This post has been edited by balwr: May 19 2009, 12:01 PM

Agents chasing for monies, policy holders need to suffer. Insurance is always an dillema issues.

i'm in favour of more transparency in the insurance business where all available plans are easily available and the customer can research and decide on their own (or with advise of consultants/agents) what to get.

right now, all the knowledge is in the hand of agents and unscrupulous/unknowledgeable ones may steer you away from the plans you need to the plans they want.

sure the information may be highly technical and complex and not immediately understandable by customers, but more information is always better than less

most of the times, many irresponsible insurance agents TARNISHED INSURANCE COMPANY IMAGE. should i said that they are not professional enough in the job?
i have once encounter with this situation, end up that the HQ OF UNIASIA have to call me up and appologise.

hurm... that is why last year piam teminated 4k non performing agents... those who cant work and good for nothing... mislead the company products and policies... didnt met thier targets and as well as breach cbc regulations...

motor insurance also got agent one? I never know that, always buy directly from am assurance.

one way or another, more information and less dependance on agents is a good thing.

reveal your super secret tables and formulas and ratios, so customers can get comparisons. let agents evolve into consultants, where customers go to get clarifications.

right now i am experiencing 3 different agents from 2 different companies telling me different things. and forummers telling me yet another thing.

what ever discount from insurance company is good for consumers... only agents will disagree

A company plans to cut cost. As a result, employees' salary will be cut (10 %). So, do you think the employees will be very happy to hear that news???

I don't see a problem with this discount plan. It opens up the market, and allows for self-regulation.
So now instead of having a fixed 10% cut every time, there's a check and balance hence the pressure to perform better. Ultimately this will create more innovative and better quality "services", hopefully reward "capable" agents and punish those non-performing agents.
Don't forget, this is a service sector. An agent's #1 primary job should be to service his/her customer for their best interest.

Insurance is generally divided into 2:
- Life
- General

General insurance includes Motor-vehicles, fire, flood, marine/ship, etc.
i.e. non-life lah.

Currently, I'm getting NCD 55% + 7% extra from my agent, as their main goal is to achieve annual target only. However, when it is open up, I can get 55% + 10% ?

For me, I don't see a need to utilise the agent. If my car accident, I'll contact the claims/adjuster within the insurance company directly. It is unlike life-insurance where the agent will help me to sort it out.

wah, your agent give good discount. can i have his contact. I'm about to renew my motor insurance and only get umbrella.

ok this is the full story ...

insurance is a statistic game, when first started it needs to collect fund. later when the reserve fund is a lot and the claim statistic drops, the profit margin in premium collection can be as high as 90%. This apply more in general insurance than life.

when that happen, it makes sense to reduce premium as the reward-risk ratio has changed.

as for agents who lost a piece of the pie, the answer is you have already been receiving more reward than the risk (claim). so move on to new marketing channel and start innovate or evolve in the same line of industry.

u can scam good money in the past doesn't mean you can scam the same way now, you have to think of new way to scam if you still want to earn those kind of money.

what thing bro?

Now is about end of July. Did they approve the hike of motor insurance premiums? Do we get the 10% commission discount if we buy directly from the insurers?

There is no hike in insurance premium, u get a discount (5% 1st yr & 10% subsequent yr for motor, 15% for fire & 25% for PA) when u choose to buy/ renew direct (w/o agent)

They should implement this for Life insurance oso since the com. is much higher and it is automatically renewed hence less follow-up for the agenet

i agree rakyat - lets wait and see . some insurers refuse direct customers now though - bad bad!

so far walk-ins have been refused by Tokio Marine they insist i use an agent. i will try to force them and to give me discount on my medical plan. not sure if it will work though.

in the past MSIG also refused to give discount to walk-in but still took the business.

anyone else has been refused walk-in or been taken as walk-in without getting a discount? please list companies to avoid

so far what i know is allianz, tokio marine...

allianz also refuse to take direct or give discount? have to spoken to HQ? i checked with them last year and they were willing to give full agent discount to walk in. would be sad if policy changed.

You can choose to buy direct from the internet...i've done this and got 5% discount.

Just make sure that you buy DIRECTLY FROM THE INSURANCE WEBSITE.

NOT FROM A REFERRAL LINK from other websites/blog. Otherwise you wont get the discount.

This post has been edited by myvi5949: Jul 29 2009, 08:50 AM