Used car dealers to reap good deals
Published on: Friday, February 27, 2015
Kota Kinabalu: Used car dealers here are expected to reap good business despite an upward revision of motor insurance premiums until 2016. According to them, used car prices will remain the same despite the upward revision which is part of the New Motor Cover Framework introduced by Bank Negara to address issues in the motor insurance premium sector. The revision is also part of the effort to de-tariff the premiums and is done on four-year adjustments from 2012 to 2016, with the increases being around the same amount each year. ADVERTISEMENT The latest revision came on Feb 23. Malaysia Used Vehicle Autoparts Traders Association Executive Secretary, Lee Cheong Boo, said Malaysian used cars are a boon to foreigners especially those from the Middle East and African countries. The same sentiments are voiced by city car dealers here who have enjoyed good business for years from locals. JW Motors representative one Raymond said used car dealers offered better deals, some include zero per cent car deposits, with additional rebates and discounts being thrown in so buyers could not resist their offer. ADVERTISEMENT "Used car dealers still have the power to adjust the prices of the cars and insurance agents could also offer some form of rebates to assist used car buyers," he said. An insurance agent claimed talks have been circulating among players in the industry that companies are not making a profit from the motor insurance premiums although the sector registered a 5.4 per cent growth last year with a total payout on claims amounting to RM5.04 billion.
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"Now the revision is one of the Bank Negara's ways to provide some leeway for insurance company to earn profits," he claimed. The General Insurance Association of Malaysia (Piam) has clarified the adjustments will pave the way to de-tariff of the premiums, which will see rates are differed according to risks of individual vehicles. According to a renowned auto industry observer, Paul Tan, the de-tariffing will see those with good claims enjoy much better premiums than those with a higher risk profile. "When that happens, premium rates will be further differentiated in accordance to the individual risk profile of vehicles, owners, as well as potential pricing differences between insurers.Stay up-to-date by following Daily Express’s Telegram channel.
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"When the de-tariffing comes into effect, we might see the emergence of 'full service' insurers with higher rates but more perks such as complementary tow truck service, as well as 'budget no frills' insurers," he said in his blog. He claimed the move could also see the potential pricing difference between insurers with the emergence of agents offering the "full service" with a higher rates but more perks type to the 'budget no frills' type.