Motor cover directive

Kuala Lumpur: Bank Negara Malaysia (BNM) wants
all composite takaful operators to offer motor insurance coverage within
the next three months, sources said.



In a meeting with eight composite takaful companies last Friday, BNM
said motor insurance cover must be provided by all operators or they
could risk losing their operating licence.

It is learnt that out of the eight, only four provide motor insurance coverage.

BNM wants all general takaful companies to come into the Malaysian
Motor Insurance Pool (MMIP) to create a level playing field with their
conventional insurance counterparts, the sources said.

"In the
meantime, efforts would be made to amend all the necessary documents to
make sure the MMIP pool is syariah-compliant," an executive at a takaful
company told Business Times.

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MMIP is a high-risk insurance pool that runs collectively by the insurance industry under the orders from the regulators.

BNM has asked The Malaysia Takaful Association (MTA), the local
umbrella body for takaful operators, to set up a task force to work its
syariah committee.

"Once the MMIP is syariah-compliant, all
general takaful players cannot refuse to offer motor cover, including
those displaced or old vehicles," the executive said.

The four
that offer motor insurance are Etiqa Takaful Bhd, Takaful Ikhlas Sdn
Bhd, Syarikat Takaful Malaysia Bhd and MAA Takaful Bhd.

The
other four takaful companies that have yet to offer motor coverage are
CIMB Aviva Takaful Bhd, Hong Leong MSIG Takaful Bhd, HSBC Amanah Takaful
(M) Sdn Bhd and Prudential BSN Takaful Bhd.

Another source said takaful operators are distancing themselves from offering motor coverage as it is an unprofitable business.

"Just like the conventional side, motor is considered bad business with high claims," he said.

Last week, BNM made it compulsory for all conventional general insurers
to provide motor insurance for displaced vehicles to ensure that all
motorists will obtain access to motor cover.

As a result,
general insurers are forced to sell motor cover through the MMIP
irrespective of the vehicle's age and claims experience and share the
losses.

Takaful operators, on the other hand, have argued that
MMIP is non-syariah-compliant since it is a high-risk insurance pool
that runs collectively by conventional insurers under the directive of
the regulators.

With the entry of the eight takaful companies, the MMIP pool will rise to 38 companies from the current 30.