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Insurers brace for likely price war
The Star
03 Jun 2013
StarBiz
3
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Insurers brace for likely price war
Motor and fire rates to be de­tariffed in 3 years
By DALJIT DHESI
[email protected]
PETALING JAYA: With less than three deteriorated as insurers offered deep
years to go before motor and fire discounts to capture business.
insurance rates are de­tariffed, insur­ However, the growth returned to
ers, who are bracing for a price war, normal when adjustments were
have embarked on various measures made," he added.
to ensure their market share and
He expects insurance players to
are constantly monitoring the mar­
ket in preparation of the de­tarrifing.
The actuaries provide invaluable
input and contribution to the com­
pany from a risk management point
of view. This definitely prepares us
face the challenge to get and retain for the new market conditions when
more customers in the motor and
impacted.
tafiffs are removed.
They are looking at various strate­ fire insurance business with the
"The company believe prudent
gies like risk­based pricing, product abolishment of tariff structure.
and disciplined underwriting cou­
innovation and differentiation,
For Etiqa, Kamaludin said the pled with good customer deliveries
claims servicing as well as strength­ company had the experience in would set us apart from the others.
ening of delivery and distribution operating in de­tariffed markets, cit­ Proper education and communica­
profitability are not significantly
channels.
tion to our agents is also important
The pricing of the classes of insur­ ing its branch in Singapore that to ensure proper risk assessment is
underwrites general insurance busi­
ance would be driven by the market
maintained," he said.
and based on risk profiles of indi­ ness.
Meanwhile, the abolishment of
He said Etiqa was also backed by
viduals. A person with a higher risk
the tariff structure would be a boon
Ageas Insurance International which
would likely pay more and vice­
to online insurance.
versa. This would translate into had the technical expertise in fire
additional demand for insurance as
the lower risk group of customers
would no longer need to cross­sub­
sidise the higher risk group.
Industry players say the removal
and motor insurance in a de­tariffed
Tune Ins CEO Peter Miller in a
recent interview said the tariff
market. Etiqa is 69.05% owned by
Etiqa International Holdings Sdn Bhd removal would enhance the growth
and 30.95% by Belgium­ and of online insurance in the country,
Netherlands­based Ageas. For 2012, which has been lagging behind other
countries in the region like Singapore,
of the motor and fire tariffs which is the company's motor business con­
tributed 42.5% and fire business Hong Kong, South Korea and
expected to come on stream by 2016
Taiwan.
would set the stage for a price war 12.6% of its general business.'
An industry observer felt that the
"Players could" distinguish them­
that could erode the profitability of
selves from others through sophisti­ long­standing tariffs for products
insurers in the short term.
such as motor insurance and fire
Etiqa Insurance and Takaful acting cated pricing because the greater the insurance had been holding Malaysia
CEO Kamaludin Ahmad told StarBiz pricing accuracy, the less the con­
back.
that although the removal of tariffs cern over adverse selection and
"The first products that often
would promote sound and prudent changes in business mix.
move online are car or fire insur­
underwriting practices and premi­
"Apart from that, the company ance. When it is time for renewal in
um growth in the long term, it could will also work towards strengthen­ a non­tariffed market, consumers
in the short term impact underwrit­ ing its distribution channels, product
would go online and compare the
ing profits.
development, brand building, actu­ prices of different companies.
"Based on experiences in the arial capability, and customer serv­
"In Malaysia, the cost has tradi­
countries which have adopted de­ ice as well as concentrate on claims
tionally been the same irrespective
tariffication, the ongoing price management, asset quality and cost
of which channel you go to, and
deregulation may support the pre­ containment.
thus, consumers would just renew
Allianz General Insurance
as opposed to checking online. Bank
mium growth in the long term but
Company (M) Bhd CEO Zakri Khir
the volatility of underwriting results said it has embarked on several Negara has begun relaxing the tariffs
but there is still a long way to go
may increase in the short term.
measures for the de­tariffication
until true free­market principles
"For example, in India, the profit­
move.
apply."
ability growth of property insurance
"We have a team of actuaries who
Headline
MediaTitle
Date
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Insurers brace for likely price war
The Star
03 Jun 2013
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Kamaludin: 'Volatility of underwriting results may increase
in the short term'.
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