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5 Reasons Why Motor Insurance Detariffication Is a Good Thing

With motor insurance detariffication being a hot topic these past couple of months, we thought we’d give you our take on why it could actually be a good thing! Here are five reasons why this move might benefit you:

1. More accurate car insurance premiums

Prior to detariffication, car insurance premiums were being regulated by Bank Negara Malaysia. This meant that insurance providers had to stick to a certain level of premiums based on things like the sum insured and your car’s engine capacity.

They could not however, take into account other equally important factors like driver behaviour and skill. These can in fact cause major accidents (human error, to be exact).

Under the previous system, both ‘good’ and ‘bad’ drivers paid about the same rates, which doesn’t sound fair.

Now, as premiums are being decided based on the risk profile of drivers, your premium rates could actually be cheaper! More skilled, less risky drivers will supposedly be subject to lower premiums.

On the other hand, those who have demonstrated ‘bad’ behaviours in the past like collecting speeding tickets or being involved in multiple accidents could be charged a higher premium.

The ways in which drivers are being rated are still not perfect though; assumptions are being made that might not be true for individual drivers.

Still, bear in mind that each driver is being judged on a number of factors that include age, driving experience, past conduct, gender, type of car and education. This should give insurance providers a more complete picture of individual drivers and hopefully charge more accurate premiums.

2. New and improved car insurance plans

Here’s your intro to economics: when businesses are free to create and sell products or services with little or no intervention from the government, competition is encouraged.

In the context of detariffication, insurance providers are now free to determine prices based on the market. So in theory, they will start competing for your business.

In a healthy environment, this could mean more affordable premiums, improved plans that cater to your needs as well as better service quality.

We are already seeing special car insurance plans for women drivers and telematics insurance that are linked to send immediate emergency assistance to drivers (more on this plan below).

| See also: 6 Car Insurance Add-ons to Boost Your Vehicle Protection – And Keep You Safe |

3. It pays to drive safe

Logically, it has always ‘paid’ to drive safe. Doing so saves lives, not just that of others but yours as well.

In terms of cost, driving in the safest way possible to prevent accidents and to avoid making claims would have saved you more with the No Claim Discount (NCD). These days however, with detariffication, it’s not just the NCD that you have to consider.

Some insurance providers are actually proposing plans with telematics (telecommunication and informatics) devices to track driving patterns in terms of speed, abrupt braking, driving distance and the like.

This way, the insurance provider can accurately monitor the way you drive and the road conditions you face. In return, good drivers will be rewarded with discounts upon future renewals.

Just to recap, being a good driver now comes with a bigger money reward too!

4. Better driving and safety tech

Now that it really is in everybody’s best interest to prevent accidents and car theft (as it should have always been), the role of car security tech as well as driving enhancements could become standard. This means safer roadways in general and (hopefully) fewer car hijackings.

At present, higher end cars are the ones typically fitted with these special features although there are exceptions.

But once detariffication is in full swing, we could see car manufacturers, insurance companies and individual drivers prioritising safety and security features.

In terms of safety systems, features like electronic stability controls that help keep your car on course or collision warning alerts that tell you if a crash is imminent can save lives and prevent accidents from happening at all.

Security features like immobilisers which shut your engine down during a theft or GPS locators that are able to quickly recover stolen cars, can help reduce losses and false claims that drive up costs.

5. More reasons to take care of your car

You might not have drawn the connection, but since poor car maintenance can lead to serious accidents – not taking care of your car could equal higher premiums.

Think about it this way, if you fail to take care of your tires and it blows on the highway, causing an accident, your claims would affect future premiums. Moreover, you might be painted as a high-risk driver and bear the responsibility with higher premiums.

This is certainly incentive enough for car owners to give theirs the TLC it deserves, don’t you think?

There’s another reason to take care of your car – it’ll reduce theft risk. Just imagine your car stalling on a lonely highway or breaking down in a secluded area. This might make it a target for car thieves, vandals and other road crimes. So for the sake of potentially lower premiums (more importantly, personal safety), it’s best to upkeep your car!

Will detariffication affect the way you buy car insurance?

It should! This is because as mentioned, there’s a whole new range of insurance plans and deals on offer due to healthy competition among insurance providers for your business.

Thus, buying insurance the way you used to i.e. from your family insurance agent or via the same provider again, could mean you missing out on better plans.

To put yourself in the best position to find the most affordable plans under the best terms, all you have to do is research your options.

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