Another shot at safer roads

WILL risk-based motor insurance finally make Malaysian roads safer – or is it just another well-intentioned idea like the Kejara demerit points system?

Malaysia’s roads remain stubbornly lethal. Crashes climbed from 739,877 in 2023 to 778,159 in 2024 and 790,614 in 2025. Fatalities hovered around 6,464 in 2024 and reached 6,537 in 2025, with motorcyclists accounting for roughly two-thirds of the dead.

Against this grim backdrop, the insurance industry and government are pushing a fuller risk-based pricing model for motor cover. On paper it looks great: safer drivers pay less, reckless ones pay more, and the financial sting supposedly encourages better behaviour. In practice, will it reduce accidents?

The Cermat Madani programme with its Risk Adjusted Premium Computation (RAPC) draws on JPJ data, traffic summons records (integrated with police), accident history, past claims and vehicle usage to build a sharper risk profile for each motorist. Low-risk drivers with clean records can enjoy additional rebates of up to 10% on top of the existing No-Claim Discount (itself up to 55%), potentially delivering total savings of 65%. High-risk drivers face higher premiums.

Countries that have widely adopted risk-based pricing models for motor insurance have seen a measurable reduction in road accidents and localised traffic risks. Academic and industry studies globally show that moving from traditional static demographic models (age, gender, location) to behavioural pricing structures drastically reduces accidents.

A key example is in the United States, where the top 10 auto insurers have risk-based pricing integrated across their portfolios. Data has shown a 30% to 40% reduction in crash frequency among programme participants.

Closer to home, Singapore, Thailand and Japan have all introduced risk-based financial incentives for their motor insurance industries.

Cermat Madani has already been rolled out and I for one am looking forward to lower insurance premiums. Unfortunately, when I renewed my road tax and insurance earlier this month, I learnt that agents are excluded from the programme and the only way to access the additional 10% discount is via the app.

This does not make sense as not everyone uses the JPJ app to renew. A fairer method would be to include all or at least a sizeable number of insurers in the app to access merit points rewards. The system should allow for agents to use these points for eligible clients.

Hopefully the lessons learnt with Kejara (introduced in 2017) should be applied with this new initiative. Kejara failed because of a lack of enforcement action when demerit points were supposed to ultimately trigger licence suspension.

Road safety advocates have long pointed out that fines in a Malaysian context are no longer enough to deter reckless driving and address the record number of road crashes.

To be fair, the Transport Ministry has taken note of shortcomings and recently announced a revamped Kejara that will go hand in hand with Cermat Madani – essentially this means a demerit and merit points system working in tandem.

This revamped Kejara and the introduction of risk-based pricing must address the culture of speeding, distraction, poor motorcycle behaviour and inadequate infrastructure. Incentives work only when there is proper feedback, data are accurate and trusted, and the consequences feel real and unavoidable. RAPC will depend heavily on clean, timely JPJ and police data; gaps or delays will blunt its edge. The danger is that high-risk groups like young riders may simply absorb higher premiums or shop for the cheapest cover rather than change habits. Affordability concerns for lower-income motorists could also create political pushback.

According to data from the World Health Organisation (WHO), the countries that achieved a 50% or higher drop in road traffic deaths over the last decade (for example, Norway, Denmark, Japan) relied heavily on comprehensive state interventions rather than insurance frameworks alone. These include strict national legislation on Blood Alcohol Concentration (BAC) limits, automated speed enforcement networks (for example, AI-enabled speed cameras) and finally, massive investments into pedestrian-focused urban transport infrastructure.

Risk-based pricing is still worth pursuing. It is fairer, more sustainable for insurers and creates a market signal that safer driving has a tangible financial reward. Combined with a properly enforced Kejara 2.0, expanded automated enforcement, better motorcycle training and infrastructure, and public education that treats road safety as a social norm rather than a seasonal campaign, it can contribute to lower accident rates.

Alone, however, it will not. Malaysia has no shortage of systems designed on paper to save lives. The test is whether the latest one is implemented with the rigour and consistency that the original Kejara so conspicuously lacked. Until then, the daily death toll will continue to expose the gap between well-intentioned initiatives and deadly Malaysian roads.