Understanding Your Motor Insurance and Takaful Rating Factors

Originally posted 2019-01-24 01:12:28.

The detariffication of motor premiums and contributions on 1st of July 2017 has paved the way for insurance companies and takaful operators to offer more innovative and competitively priced motor products. What then, does it mean for you, the consumer?

Junior Cho, our Head of Market Management, General Insurance and Takaful for Zurich Malaysia shares about the rating factors that are used to price your motor premiums / contributions.

At Zurich, we conducted numerous consumer researches to fine tune the types of features and benefits that best meet the needs of our customers today. We also analysed our internal customer data to ensure that our premium and contribution rates are priced competitively. In addition to the standard motor rating factors, your motor premium / contribution now takes into account your risk profile; which includes the likelihood of you making a claim and how costly that claim might be. This is commonly referred to as a risk-based pricing model.

Type of Coverage

The coverage you choose may affect the cost of your motor premium / contribution. There are three types of coverage available –

  • Comprehensive (non-tariffed product)
  • Third Party Fire & Theft (non-tariffed product)
  • Third Party Only (tariffed product)

quick illustration of the respective coverage

You also have the flexibility to add on optional coverage such as windscreen coverage, water damage coverage etc.

With Z-Driver and Z-Driver Takaful, you can enjoy discounts off your motor premium / contribution if you choose to add on Voluntary Excess, that is, the amount you agree to pay before your insurance / takaful kick in to help pay for a covered loss. This is a great feature for those who do not drive their vehicle often or have multiple vehicles. Please note that while a higher Voluntary Excess will reduce your premium / contribution, you’d have a larger amount to pay in the event of a claim.

What You Drive

On top of the standard motor rating factors such as the vehicle model, vehicle age and engine capacity, Zurich also takes into consideration the following:

  • Based on the analysis of customer claims and industry safety reports, we categorise vehicles according to the vehicles’ susceptibility to damage, occupant injury or theft. Lower premium and contribution rates are applicable for vehicles that fare better than industry norms for eg. higher-than-average safety ratings.
  • It is more expensive to insure certain types of vehicles as the cost of repair or replacement in the event of theft or total loss is higher.
  • Insurance and takaful do not just cover damage to your own vehicle – it also protects other road users against accidents that are caused by you. This means that a lower value vehicle does not automatically result in a lower premium / contribution.
  • If you modify your vehicle to make it more powerful or look different, you should inform us as this may increase your premium / contribution. Do note that the failure to inform us of such modifications could result in the invalidity of your policy / certificate should you make a claim in the future.

Where You Live

Due to generally higher rates of theft and accidents, urban drivers pay more for motor insurance / takaful as compared to those in small towns or rural areas.

Your Driving and Claims History

If you have been in multiple accidents, your motor premium / contribution is likely to be higher as compared to someone with a clean driving record.

If you are a new driver and have not had motor coverage before, chances are you will pay more for motor insurance / takaful.

If you have not made any claims for a year or more, you will be entitled to a No Claim Discount (NCD). This feature gives you a discount on your next year’s motor premium / contribution. The discount rates are fixed by Persatuan Insurans Am Malaysia (PIAM) and range from 0% to 55% off the motor premium / contribution, depending on the type of vehicle, coverage and number of claim-free years.

Your Age and Gender

Generally, younger drivers pay more premium / contribution as they have less experience at the wheel than older drivers and are statistically more likely to be involved in an accident.Statistics have also shown that women are safer drivers. Women will enjoy lower premium and contribution rates under the Z-Driver and Z-Driver Takaful motor plans!

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