Making Use Of The Malaysian Motor Insurance Pool


Lately, most insurance companies have refused to issue 3rd party coverage for old vehicles which are 10 years or more old. This has led the authorities, namely Bank Negara to set up a special group of insurers called the Malaysian Motor Insurance Pool, hereinafter known as the “Pool”, to underwrite 3rd party insurance coverage for old vehicles which are 10 years or older.

For readers’ information, the Malaysian Motor Insurance Pool, or the “Pool”, was essentially set up to cater for vehicles which no insurance company were willing to insure, as the government had agree to allow them (old vehicle) to be on the road and 3rd party insurance was something “mandatory”.

It should also be reiterated again that the “Pool” eventually sustained losses leading to additional premium being loaded onto the consumers. Bank Negara’s latest directive to all insurance company recently has indeed been long overdue. Nevertheless, it is believed that all consumer bodies, like C.A.P. and political leaders from both the government side and the opposition parties will surely welcome its move.

The MCA president, Datuk Seri Dr. Chua Soi Lek, were amongst one of the earliest people to welcome Bank Negara’s latest directive to insurance companies. Owners of motorcycles and cars which are more than 10 years or older, will now be able to secure 3rd party mandatory insurance cover for their vehicles.

Bank Negara’s directive to all insurance companies takes effect immediately. Insurance companies are no longer allowed to imposed “loading” fees, which previously amounted between 200% to 300% to be imposed upon old cars.

Besides excessive loading fees mentioned above, insurance companies have been reported to have insisted upon the purchase of life policies and other perks such as Personal Accident Policies (PA) being purchased. However Bank Negara’s latest announcement on 3rd party insurance coverage for old cars comes with a “catch” attached. As such, motorists of motorcycles and car owners should not become to elated too soon. As the famous English proverb goes, “we are not out of the woods yet”.

If one were to read between the lines, it says explicitly, fees cannot imposed up vehicles which are “road worthy”. And the pertinent question which most owners of old vehicles would like to ask is, what actually represents “road worthiness”?

Bank Negara has said, vehicles which are more than 10 years or more will be required to under an annual road worthiness inspection exercise to be conducted by the Puspakom authorities. With the above said requirement, it looks as if the government has reverted back to its last decision which it made some 6 months back. It then allowed old cars more than 10 years old to finally be used on Malaysian roads. The “reprieve” it looks as if, has finally been withdrawn again! We are now back again at square one, so to say.

Motorists will have to wait further to know if the authorities will implement the mandatory road worthiness exercise which has been once again imposed upon vehicles which are 10 years old and older! Still harping on the issue of 3rd party insurance for old cars, to be fair to the insurance companies, premium rates for 3rd party has not been raised since 1978.

Considering insurance companies current profits, it is believed that, they are still capable of making a comfortable profit. They can well afford to use profits from comprehensive policies to offset 3rd party coverage for old cars.

By | 2012-09-20T22:30:31+08:00 September 9th, 2012|Auto Insurance|2 Comments

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2 Comments

  1. Darren September 11, 2012 at 5:42 pm - Reply

    Hi Cikgu Yap,

    If one (A) want to sell a car which still under bank loan to an individual (B), B got the approved loan from Bank already. What is the next step for both seller and buyer ?

    Is it the buyer’s bank need to settle to seller’s existing bank loan and pay all the remaining to the seller then only do transfer of ownership ?

    Is the transfer of ownership to be done by buyer’s bank ?

    Very much appreciate your advice on the process. Thanks in advance.

    • Cikgu Yap September 13, 2012 at 4:44 pm - Reply

      Your suggestion is correct. Arrange for bank to settle seller’s loans and pay seller the existing balance. In such cases, I assume bank would be in charge of transfer procedures.

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