BNM regrets MyCC decision

Bank Negara Malaysia (BNM), the insurance regulator has released a statement regretting the final decision on the potential infringement of the Section 4 of the Competition Act 2010 by the Persatuan Insurans Am Malaysia (PIAM) and its 22 members.

In its decision, the Malaysia Competition Commission (MyCC) concluded that PIAM and its 22 members had infringed Section 4 of the Competition Act 2010 in that the parties had entered into an agreement on the application of trade discounts on parts prices and hourly labour rates for motor vehicle repairs by workshops under the PIAM Approved Repairers Scheme (PARS). Besides imposing financial penalties, MyCC also directed the parties to cease and desist from implementing the agreed parts trade discount and the hourly labour rate, and for such discounts and rates to be determined independently by individual insurers and workshops.

Bank Negara Malaysia (BNM) regrets MyCC’s decision as the arrangement was put in place through the facilitation and direction of BNM to the general insurers to address disputes between workshops and general insurance companies that had adversely impacted consumers. This was due to protracted delays and disagreements over insurance claims payments for motor repairs. The resulting arrangement was implemented after discussions between PIAM and the Federation of Automobile Workshops Owners Association of Malaysia (FAWOAM). As a result of BNM’s regulatory intervention, delays in settlement of claims arising from motor repairs had reduced significantly by 55 percent from 2010 and policyholders were better served by a more efficient claims settlement process, the statement said.

BNM has stated that the decision by MyCC may unravel the positive outcomes from past and ongoing initiatives by BNM and the industry to curb fraud and improve efficiency in the motor claims process. This in turn will have wider ramifications for access to and the cost of motor insurance for Malaysian consumers.