CASSA: THIRD PARTY INSURANCE CHANGES – CENTRAL BANK UNDERMINING CONSUMER INTEREST!
The Consumers Association of Subang and Shah Alam Selangor (CASSA) today accused Bank Negara of going on a â€˜frolic of its ownâ€™ and spearheading their â€˜own private interest and agendaâ€™ in proposing drastic changes to the present third party insurance scheme.
Bank Negara has claimed that the amendments are necessary for the following reasons:
1.Â Â Â Â Ensure availability of basic protection to motorists
2.Â Â Â Â Provide basic protection at reasonable premiums
3.Â Â Â Â Additional cover on top of basic protection will be
4.Â Â Â Â Faster settlement of claims
We are told that at end-2009 there were approximately 10.8 million motor insurance and takaful policies issued by insurers and takaful operators.
We are told that comprehensive policies make up 67.2% (7.24 million) of total policies issued while third party policies make up 32.8% (3.54 million)
We are told that the majority of comprehensive policy owners were owners of private cars. For third party policies, majority are motorcyclists!
As far CASSA is concerned all of the above 4 reasons are blatant misrepresentations and misleading.
And such we want to addressÂ each of the above radically!
Both one and two are available today and as it stands there is no necessity whatsoever to make any changes.
What is however necessary is that we have more insurance companies providing third party insurance coverage at reasonable rates to consumers.
We now ask why the need for an additional top-up is.
Whose rights and interests are being met by this top up?
Is this not profiteering?
How will Malaysian consumers in the target group of the lower income and the poor afford an additional â€˜top-up?â€™
Will this not further create a consumer backlash against the federal government?
Will not the federal governmentâ€™s MPs and State Assemblymen face the brunt of the backlash in the various political constituencies?
Bank Negara claims that for every RM1.00 paid by consumers Insurance companies are paying out RM2.67 as claims!
In other words, the state of Insurance companies in this country according to Bank Negara is one of loss and soon by that contention we will see most, if not all insurance companies going bankrupt!
As far as CASSA is concerned this is again a blatant lie!
Why is Bank Negara just citing third party insurance claims when the whole question of insurance covers many lucrative and profitable areas which reap in billions of profits?
Is this RM1.00 referred to by Bank Negara, the entire premium paid by consumers or only a portion of the premium paid?Â If it is only a portion of the actual premium paid by consumers, then Bank Negara has again misled the public.
Anyway, in return for the billions they make as profits from other sectors of insurance, is this not a way of giving back something to the Malaysian society?
This could be the Insurance Companyâ€™s national service.
Secondly we ask two pertinent questions:
1.Â Are Insurance companies really on the brink of losses and bankruptcy? If so â€“ are they prepared to open their financial books for us to appoint an independent panel of accounting experts to conduct an exhaustive and comprehensive investigation into their financial state?
2.Â We need to look at their salary structures and fringe benefits, perks, bonuses to see if really they are financially suffering. That there are no leakages, seepages and over salaried officials in the sector!
3.Â Â We need to assess if there has been massive retrenchment and salary cuts taken across the board as well.
4.Â Most importantly if the insurance sector is indeed losing money, why is there a lobby for more insurance licenses to be distributed?
Is Bank Negara really articulating the grievances of the Insurance industry or going on â€˜a frolicâ€™ for their own private agenda?
Bank Negara has gone on record to say that they will facilitate redress between 2 to 4 weeks!
This is a mammoth misrepresentation and a blatant lie!
For redress, we need to ascertain fault and to determine fault, we need police reports and secondly to determine injury, we need comprehensive medical reports and based on the present track-record only an absolute idiot will say that we can determine both in a fast track procedure within 2 to 4 weeks!
Another important question raised is why the need to restructure motor policies when the present proactive changes brought about by Chief Justice Tun Zaki is addressing this issue admirably!
1.Â There are designated courts to address this matter.
2.Â We have mediation
3.Â Guidelines on awards have been followed through conservatively unlike awards in the US or the European Union!
So what is the â€˜real issue and motivationâ€™ on the part of Bank Negara here?
Today, I accuse the Central Bank of misleading the nation and in particular, the Prime Minister!
The Central Bank instead of addressing issues that we have from time immemorial brought to them like the irresponsible behavior of banks, bank charges, the â€˜black handsâ€™ working with third parties in foreclosures, the repossession of vehicles, credit card fraud and its profiteering charges, involvement in abandoned construction projects is spending far too much time and resources on an issue which is an non issue!
What about taking steps to reduce the existing leakages in the insurance industry – for example, motor repair claims been settled by insurance companies at exorbitant amounts?
What about fast tracking redress for clear cut negligent cases where there has been loss of innocent lives instead of haggling and appealing and ultimately frustrating the rights and interests and of true justice for the victim!
Does Bank Negara have an ulterior motive in spearheading this restructuring!
Is the real intention of Bank Negara in pursuing this matter of setting up a new company to control and play a role in it directly, indirectly or by the appointment of a retiring Bank Negara official (s) on the board of such a structure and entity with vulgar salaries and perks?
Does Bank Negara want the government to fund the new company at a tune of over RM500 Million per year as majority shareholder with the industry playing a token role?
The pertinent question then is why should the government get involved?
How is the government going to explain to the masses in Malaysia that while they are asked to forgo their subsidies here, we have a classic case of Bank Negara inducing a subsidy scheme!
The supposedly loss making part of the motor insurance claim is taken over by a Government owned company while the profit making part of the motor insurance claim is retained by insurance companies.Â Who is Bank Negara trying to help?
I wish to warn and point out that consumers will never accept such a change which serves in my contention the interest of the insurance industry and the central Bankâ€™s cronies!
For this reason and this reason alone, CASSA appeals to the Prime Minister and the Ministry of finance to reject the Central bankâ€™s attempt to serve private interest rather than that of over 27 million Malaysian Consumers!
The present system is working and as such, there is no need for the government to get involved or initiate radical changes that serves not the poor, marginalized and grassroots communities.
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