Bank Negara Malaysia (BNM) has raised the issue of the need to improve the motor claims process, and has suggested ways to amerliorate the process.

In its Annual Report 2019 released last week, BNM points out that motorists involved in accidents often cite the time taken for insurance and takaful claims to be paid – and the opacity of the claims process – as major pain points. On average, own damage claims take two months to be paid from the point of notification. Third-party property damage claims often take even longer to be paid.

Conceding the need to ensure that only claims of merit are paid, BNM says that it is unavoidable that the claims process involves checks and controls. Without appropriate controls, motor insurance premiums could increase significantly and become unaffordable for segments of the population.

Improving motor claims processing

However, the regulator also says that there are a number of strategies that can be pursued to make the process more efficient.

Guides for motorists

First, motorists should be better equipped to navigate the claims process. The Bank requires insurers and takaful operators to provide motorists with a standardised guide on the appropriate steps to take when involved in an accident together with their motor policies. These guides are also available on the websites of insurers and takaful operators. In 2013, the industry came together to establish Accident Assist (1300-22-11-88), a helpline that provides around-the-clock roadside assistance. Callers are also able to pose questions on coverage and claims procedures.

Rationalise internal processes

Second, the industry must continue to simplify and rationalise internal processes for managing claims. The Bank is reviewing its existing standards on timelines to be met by insurers and takaful operators in processing claims. The aim is to reduce the time taken by leveraging on better information and disclosures. In this regard, the Bank backed efforts by the industry to establish a central database on the costs of motor parts and repair times, and to promote consistency in the quality of repairs. The Bank also continues to provide a regulatory environment that encourages the industry to adopt digital solutions to further shorten claims turnaround times. For example, the use of video calls and drone technology allows loss adjusters to inspect damaged vehicles remotely and estimate damages in real-time without needing to be physically present at workshops.

Accident reporting centres

Third, public sector agencies involved in overseeing the transportation and motor sectors in Malaysia also have a critical role to play. Effective regulation and enforcement to promote professional conduct and prohibit fraud and abuse are key to protecting the integrity of motor repairs, treatment of injury and the claims process. For instance, setting and enforcing clear minimum standards for repairs will elevate the overall level of professionalism of workshops, increase consumer confidence and minimise the scope for disputes during claims settlements. There is also scope for a more fundamental rethinking of the accident and motor claims process. To illustrate, some countries have removed requirements for certain classes of accidents to be reported to the police. Instead, cases are reported to designated centres that function not only as workshops, but also as accident reporting centres linked up with insurers. These arrangements are supported by industry agreements and legislative changes, which define responsibilities of relevant parties to conduct pre-inspection of the damaged vehicle(s) prior to repairs, and govern the apportionment of liability to the parties involved in an accident.

Dispute resolution

An effective dispute resolution mechanism involving independent arbiters to resolve any grievances is also critical. For claimants, this means quicker claims processing, trustworthy repairs, and swift financial relief in the event of injury