Bank Negara has been accused of going on a frolic of its own and spearheading a private interest in  proposing drastic changes to the third party insurance scheme.

jacob george interview 031006 look In levelling the charge, Consumers Association of Subang and Shah Alam Selangor (Cassa) president Jacob George urged the government to reject the move.

He also rejected the central bank’s intention to set up a new company with government involvement and funding, asking if it intends to control this and play a direct or indirect role in it.

“Or will it be a vessel for appointing retiring Bank Negara officials to the board with vulgar salaries and perks?” he queried in a statement.

Jacob also asked if Bank Negara wants the government to fund the company to the tune of over RM500 million per year and how the government intends to explain the “new subsidy scheme” to the people.

Bank Negara had claimed that the amendments are necessary to:

•    Ensure availability of basic protection to motorists

•    Provide basic protection at reasonable premiums

•    Make available additional cover on top of basic protection

•    Enable quicker settlement of claims

“As far as Cassa is concerned, all of these reasons are blatant misrepresentations and misleading...(The first two, for example) are (already) available today and there is no necessity to make any changes,” noted Jacob.

traffic jams traffic congestion “What is however necessary is that we have more insurance companies providing third party insurance coverage at reasonable rates to consumers.”

Jacob further dismissed the claim that the scheme will lead to settlement of claims within two to four weeks, calling this a blatant lie.

“For redress, we need to ascertain fault and to determine fault, we need police reports and secondly to determine injury, we need comprehensive medical reports...,” he explained.

‘Open books for checks’

He asked if insurers are on the brink of losses and bankruptcy and if they are prepared to open their books to an independent panel of accounting experts for investigation.

“We need to look at the salary structures and fringe benefits, perks and bonuses to see if really they are financially suffering, and (to see) that there are no leakages, seepages and over-paid officials in the sector.

“Most importantly if the insurance sector is indeed losing money (as claimed), why is there a lobby for more insurance licences to be distributed?”

He provided data showing that, as at the end of last year, about 10.8 million motor insurance and Takaful policies had been issued. Comprehensive policies made up 67.2% (7.24 million) of total policies issued while third party policies made up 32.8% (3.54 million).

police parliament blockade traffic jams in city area 140708 02 The majority of comprehensive policy owners were owners of private cars. For third party policies, the majority of those insured are motorcyclists.

As such, he stressed the need for more insurers being legally required to provide third party coverage “as a national service” and at a cost that is fair and reasonable.

The present system is working and, as such, there is no need for the government to endorse radical changes that do not serve the poor, marginalised and grassroots communities, he added.

The Bar Council has similarly criticised the move and called for transparency in the scheme, which will affect pay-outs for bodily injury and death.