All you want to know about... MOTOR INSURANCE 

The following article is extracted from:

SUNDAYSTAR SUNDAY 27 JULY 2003

Insurance firms to follow standard price list By M. Krishnaamoorthy

KUALA LUMPUR: In a move to stop inflated motor claims that can lead to higher motor insurance premiums, Bank Negara has directed insurance companies to follow a standard price list for spare parts and labour charges from next year (2004). The mandatory list, which provides the retail price of the original parts produced by their manufacturers, was included in the central bank's circular to the insurance companies on June 16.

The General Insurance Association of Malaysia (PIAM), which has been actively promoting the use of such a system by insurers, repairers and insurance loss adjusters, appointed research group, Motordata Research Consortium Sdn Bhd (MRC) to draw up the list. Bank Negara, which gave its approval, had initially required the insurance companies to use the database from October 2001. After reviewing the matter, the central bank set June 30 this year as the deadline for 60% usage and, beginning next year, a full scale utilisation.

Essentially, the list provides fair and accurate pricing and requires insurance companies to minimise subjectivity (or assessment of claims) as well as reduce disputes in motor repair estimations. PIAM executive director Lim Chia Fook said the computerised estimating system is beneficial to all parties involved in crash accident repairs. "There are many advantages in using a computerised estimating system, among which are thoroughness and consistency in estimations, speed, improved efficiency and better claims management. We are pleased to note that many insurance companies have realised the benefits of using such a system. While we believe all insurance companies will eventually come around to adopting this system, the central bank directive serves to speed up this process," he said.

More than 80% of repairers under the PIAM Approved Repairers Scheme (PARS) have installed computerised estimation software, which taps into the MRC Database. MRC chief operating officer Khaeruddin Sudharmin told The Star the project is about transparency and consumers would benefit from itemised billings from repairers, adjusters and insurers. "Consumers will no longer have to wait long before their damaged vehicles get approved for repairs from insurers. What (approval) used to take as long as three months in the past can now be done as early as within seven days.

Malaysian Assurance Alliance (MAA) welcomed the move, saying that it would be able to comply by the Dec 31 deadline. Its executive director and CEO, Ramlan Abdul Rashid, said the MAA existing paper workflow system can easily programmed to link with the submission system of MRC. "This system will speed up the submission of claim documents from workshop to insurer to provide faster service to claimants. It also assist to eliminate duplication of claims due to fraud," he said.

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