As a motorist and also as a pedestrian (whilst not driving) I am extremely worried and deeply concerned that the government has lent support to the proposal put forth by the insurance industry to limit compensation for third party injury claims up to a maximum sum of RM100,000. Third party in this context refers to any one other than the driver himself at the material time of the accident.

The law as it stands now is a system of Tort Law, meaning that where there is a civil wrong, the law will address such a wrong and provide remedies. Once negligence is established against the motorist (offending party), his insurance company will have to pay compensation to the victim.

This compensation to the victim for bodily injury is mandatory under existing laws even if the motorist (or policyholder) has breached certain policy terms and conditions eg, failing to report the accident to his insurer.

Amongst others, the quantum of damages ie, general and special damages (or compensation) are worked out depending on the injuries sustained, actual medical or related expenses incurred as well as well as length of time the injured is incapacitated from working or earning an income.

It is not unknown that paralysed victims have in the past been awarded sufficiently large compensation, taking into account the age of the injured, his profession and qualification, future prospect for promotion or potential future earnings, his expected years of uninterrupted earning (if not for the accident) as well as cost of long term nursing care.

In such a situation, I simply cannot imagine how a bread winner who sustains very severe injuries or is paralysed is able to support his family for life with just RM100,000. This RM100,000 may not even be sufficient to settle his medical bills (in these present days of high cost of medical care). What is there left out of the RM100,000 when he leaves hospital after 6 to 12 months of hospitalisation?

Undoubtedly his spouse (if she is not gainfully employed) will have to seek employment, leaving the young children unattended and unschooled. This is how social ills are created which will add on to the many social problems the country is already facing.

The insurance service is akin to a social service. It is ironic that CEOs of insurance companies in their zest to achieve high profits for their shareholders and ultimately earn more year end bonuses for themselves have become heartless, devoid of any compassion whatsoever towards the hardship and sufferings of traffic victims who are not adequately compensated.

Based on media reports, the RM500 million fund (raised through higher comprehensive premiums or paid by taxpayers through a government payout) will be managed solely by the 40 insurance companies. Can accident victims expect a fair and equitable settlement offered to them by the insurance companies’ staff managing this fund when such staff are neither medically nor legally trained for such a function? Added to this uncertainty is also the question of vested interests which may also cloud their judgement.

The concept of insurance is the ‘spreading of risks’. The insurance industry is deliberately deviating from this concept by ‘taking only the meat and leaving out the bones’. Yet in spite of this deviation and selection, no general insurance company presently listed on Bursa Malaysia (including one which underwrites substantial motor insurance in their portfolio of business) has reported huge losses so far.

On the contrary, they have been enjoying a very good run for many years with motor insurance being ‘cash before cover’. Many aspects of an insurance company’s operation today are computerised, thus reducing staff costs and many other incidentals like medical treatment, EPF contribution, office rental etc.

It was not too long ago that insurance companies put up advertisements giving away free umbrellas or other gifts to motor policyholders for each vehicle insured with them. This practice was stopped only when Bank Negara Malaysia issued a directive against such doing in order to curtail unhealthy competition and undercutting. Quite frankly, if the motor insurance business is such an unprofitable business that insurance companies allegedly pay RM2.70 for every RM1 premium received, then why are they going all out to lure motorists to insure with them? Even now there are direct discount given to lure walk-in motorists to insure with them.

Why do you need to offer incentives for an unprofitable business if this has been the case all these years? Why not ask the government to nationalise the motor insurance business like what was done in some other countries? In the history of insurance development in this country, strangely no insurance company, whether singularly or collectively, has petitioned the government to nationalise the motor insurance business.

As it is now, many insurance companies are openly forcing motorists to purchase personal accident cover as a pre-requisite to insure their older vehicles. Should the third party bodily injury and death scheme (TPBID scheme) come into force, this would be a good justification for insurance companies to sell more personal accident cover because of the low compensation offered by the TPBID scheme.

Perhaps in the not too distant future, insurance companies would also come out with a new product aptly called ‘motor personal liability cover’ where in exchange for a sizeable premium paid by motorists, insurance companies would indemnify motorists as and when they are sued by accident victims for compensation over and above the limit of RM100,000 recoverable under the TPBID scheme.

In conclusion I plead for and on behalf of each and every motorist and pedestrian that the government outright reject this TPBID scheme as such a scheme only benefits the 40 insurance companies at the expense of every motorist and every one who at one time or another has to step out onto a public road as a pedestrian. Public interests should not be stolen, trampled upon or sacrificed to enrich a minority group.

The government has of late either changed or refused to put in place policies which are not in the people’s interests. Examples of these are the real estate property gains tax, the GST and the fuel subsidy. By rejecting the TPBID scheme outright, the government would be reassuring the rakyat once again of their caring attitude and in a caring society the government would undoubtedly get the rakyat’s vote of confidence now and forever.