Page 221 - Contributed Paper Session (CPS) - Volume 1

CPS1283 Kelvin H.C.Y et al.
i. the transition to market-based pricing is gradual, and is supported
by prudent risk management and practices;
ii. access to basic protection or compulsory lines remain affordable,
and any adjustment to the prices of such products is implemented
gradually;
iii. consumers’ interest remain protected through enhanced
transparency and improved sales and marketing practices; and
iv. overall stability in the general insurance market is preserved.
Motor
With effect from 1 July 2016, premium rates for new products will not be
subject to the Motor Tariff and shall be determined by the general insurers
according to its individual risk pricing model. With effect from 1 July 2017,
premium for Comprehensive and Third Party Fire and Theft may be
determined by general insurers according to its individual risk pricing model.
However, if the premium rates vary from the rates that are applicable on 30
June 2016 by more than 10%, general insurers need to seek Bank Negara
Malaysia’s approval prior to the implementation of the new rates. Premium
rates for Third Party products shall continue to be determined in accordance
with the Motor Tariff.
Under a tariff-based pricing regime, general insurers referred to the
Malaysian Motor Tariff to determine premiums based on type of cover,
geographical location, cubic capacity, and sum insured. There are no explicit
driver-related risk factors allowed. The Tariff allowed for further risk-based
loadings, however, these are usually not applied.
Fire
With effect from 1 July 2016, premium rates for new products will not be
subject to the Fire Tariff and shall be determined by the general insurers
according to its individual risk pricing model.
However, with effect from 1 July 2017, premium rates for Fire products
which are defined under the Fire Tariff shall continue to be determined in
accordance with the Fire Tariff with any variations as may be specified by Bank
Negara Malaysia.
Actuaries
Under a phased liberalisation environment, general insurers were allowed
to determine their premiums by adopting preferred rating factors in the
application of statistical and predictive models. The policy document specifies
that the board and senior management are expected to leverage on the advice
of a professionally qualified actuary in fulfilling their governance requirements
and the introduction of new products.
The responsibilities of the board and senior management includes, inter
alia–

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