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Friday, May 21, 2010

ARTICLE: Young men should pay more for car insurance

Young men should pay more for car insurance, says industry group


KUALA LUMPUR, May 13 — The average male in his 20s accounts for one in four car accident insurance claims in Malaysia and should be charged a higher premium, an industry report released today concluded.

Although individuals aged between 21 and 30 years represented only one-fifth of motor insurance holders, their average claims frequency was 47 per cent higher than the 41-to-45 age group.

“A risk rating system would ensure those in high-risk groups would pay more,” said ISM Insurance Services Malaysia Berhad (ISM) CEO Carl Rajendram today.
ISM is a shared services company that provides statistics and information on insurance coverage and claims to insurance companies and takaful operators.

Rajendram urged the government to reform the outdated tariff insurance system that has been in place since the 1970s as it charges similar premiums to both high-risk and low-risk groups.
Comparatively, other markets like the United States and Australia use risk-based rating systems that vary motor insurance premiums depending on risk characteristics such as age, gender, driving record and vehicle model.

Insurance companies in those markets also offer pay-as-you-drive policies where drivers only need to pay for the total distance driven on a rate determined by their driving habits, as monitored by Global Positioning System (GPS) devices installed in their vehicles.

“A risk-based system will provide incentives for road safety, better vehicle safety and security standards, and better driver behaviour,” said Rajendram in his presentation of ISM’s 2009 Motor Insurance and Takaful Statistics Report.

He added that the net claims incurred ratio for third-party bodily injury increased by more than 80 per cent from 2002 till 2009.

A risk-based insurance system would also incentivise express bus companies to improve their safety standards, and vehicle owners to install good safety and anti-theft systems in order to avoid paying high premiums, said Rajendram.

“A total of 21 per cent of buses are more than 20 years old,” he said. “Programmes to phase out these buses should be put in place by the government.”

END OF MalaysianInsider Article. Source:

In my opinion, Malaysia should LOOK NO FURTHER than United Kingdom's FAIR Tiered Insurance schemes.  It rewards Frugal, city cars (Lower group)  and penalise Performance Car (Higher group).  It also rewards Family men and penalise Young and RECKLESS Drivers (Points based).  Here are its "BASIS of Premium Charges".

It is classified according to the following:

1) Gender: Men average more miles driven per year than women do, and consequently have a proportionally higher accident involvement at all ages. Insurance companies cite women's lower accident involvement in keeping the youth surcharge lower for young women drivers than for their male counterparts, but adult rates are generally unisex.

2) Age: Teenage drivers who have no driving record will have higher car insurance premiums. However, young drivers are often offered discounts if they undertake further driver training on recognized courses (eg. Defensive Driving Courses).  Senior drivers are often eligible for retirement discounts reflecting lower average miles driven by this age group. 

3) Driving History: In many Countries, moving violations, including running red lights and speeding, assess points on a driver's driving record. Since more points indicate an increased risk of future violations, insurance companies periodically review drivers' records, and may raise premiums accordingly.

4) Marital Status: Policy owners that are married often receive lower premiums than single persons. One reason is that marriage may be considered an indicator of stronger financial stability within the household

5) Vehicle Classification.  In UK, it's graded according to Groups.  Group 1 (for Perodua Kelisa) to Group 20 (for Mitsubishi Evo).  The higher the groupings, the more $$$ it is.

6) Distance/Mileage based: Insurance are higher in London or Large Cities compared to Countryside OR Suburbs as more cars perceived as Higher risks. 

7) GPS Based System. 

8) Classic Car status.  Classic Car (above 25 years old) tends to have LOW Mileage (RARELY USED), as a result, Insurance Risk lower, hence Lower Premiums.


That's all folks, thanks for having the time and patience to read this article of mine (Partly)...

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