PETALING JAYA: Efforts to reward safe driving through lower insurance premiums under the Cermat Madani initiative must be accompanied by transparent pricing mechanisms and robust consumer protections, say stakeholders.
Federation of Malaysian Consumers Associations (Fomca) secretary-general T. Saravanan said consumers must clearly understand how motor insurance premiums are calculated, what driving behaviours are being assessed, how discounts are determined and under what circumstances premiums may increase.
“Consumers should not be placed in a situation where premiums are determined by complex algorithms or scoring systems that they cannot verify, challenge or understand,” he said when contacted.
If telematics devices, mobile applications or other technologies are used to collect driving data, Saravanan said consumers must provide informed consent and be fully informed about what information is being collected, how it will be used, who will have access, how long it will be retained and whether it will be shared with third parties.
“An effective and independent dispute resolution mechanism must be in place.
“Consumers should have the right to challenge inaccurate data, unfair assessments or premium calculations that they believe do not accurately reflect their driving behaviour.
“Regulatory authorities, particularly Bank Negara Malaysia, must ensure that there is adequate oversight, regular audits and enforcement measures to prevent unfair practices,” he said while expressing concern that certain groups of motorists may not be able to benefit from the proposed discounts if the framework relies heavily on telematics or digital monitoring technologies.
Saravanan added that some consumers may have legitimate privacy concerns and are uncomfortable sharing detailed driving data.
“Others may own older vehicles that are not compatible with telematics devices or face technological and connectivity limitations.
“Participation could remain voluntary and insurers should ensure that consumers who opt out are not unfairly disadvantaged,” he said, proposing alternative methods such as clean claims history and long-term safe driving records as well.
“The objective should be to reward safe driving behaviour without creating barriers that exclude certain categories of consumers from benefitting,” he added.
On June 9, Transport Minister Anthony Loke said motorists with good driving records could soon enjoy an additional motor insurance premium discount of up to 10% under the Cermat Madani initiative.
The rebate is for motorists assessed as “low-risk” through the MyJPJ application and is on top of the existing no claim discount (NCD) ceiling of up to 55%.
Road safety expert Assoc Prof Dr Law Teik Hua said moving towards a risk-based motor insurance pricing is likely to bring greater links between safe driving habits and premiums.
Among the key safeguards, he said, would be to introduce transparency and scientific soundness into the definition and use of risk indicators used by insurers to adjust premiums.
“The more behavioural data and mobility information becomes part of insurance pricing, the more important it becomes to establish rules on which data is used, for how long it is stored, ownership of such data and whether consumers can choose to opt out without consequences,” he said.
Law, who heads the Universiti Putra Malaysia Road Safety Research Centre, said any risk-based motor insurance pricing should be gradually implemented.
“Key performance indicators would need to be established. This includes metrics on road safety improvements and customer satisfaction,” he said.
