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Wednesday, 1 March 2017

Bank Negara Malaysia has defended the General Insurance Association of Malaysia and its 22 members against the MyCC decision to fine them RM213.45mil

Bank Negara slams MyCC’s decision to fine PIAM and its members

Bank Negara says it issued a directive to the general insurance firms following disputes between workshops and the insurers over insurance claims payments for motor repairs.
Bank Negara says it issued a directive to the general insurance firms following disputes between workshops and the insurers over insurance claims payments for motor repairs.
 
KUALA LUMPUR: Bank Negara Malaysia has defended the General Insurance Association of Malaysia (PIAM) and its 22 members against the Malaysia Competition Commission’s (MyCC) decision to fine them RM213.45mil for an “anti-competitive agreement” with a group of workshops.

“The proposed decision is most unfortunate as it will severely impact consumers’ interest. Public benefits are served by the arrangement that was mutually agreed between PIAM and the Federation of Automobile Workshop Owners’ Association of Malaysia (FAWOAM),” the central bank said in a statement on Wednesday.

The statement came in shortly after PIAM issued a statement asking MyCC to reconsider its proposed decision and the imposition of the financial penalty and saying it would seek legal advice to defend its position that the agreement with FAWOAM was not anti-competitive.

Bank Negara concurred with PIAM that the arrangement came about after it issued a directive to the general insurers in 2011 to resolve consumer complaints.
The directive aimed to address disputes between workshops and general insurance companies over insurance claims payments for motor repairs.

“Such disputes had given rise to protracted delays in repairs and caused significant inconvenience to consumers,” the bank explained.

According to Bank Negara, it had also received complaints on unsatisfactory and high costs of repairs.

“The Bank had received more than 500 complaints of this nature in 2011 alone prior to the arrangement. Such complaints have now been reduced by 50%,” it said.

Bank Negara called the arrangement “necessary” to reflect reasonable costs of repairs in an environment where motor insurance premiums are regulated by a tariff.

It argued that inflated claims, if not effectively controlled, would have led to a significant rise in the tariff premiums affecting all consumers or might cause general insurance companies to withdraw altogether from the motor insurance market.

“This occurred in 2012 in relation to motor third party bodily injury claims, when more than one million motor vehicles were referred to the motor insurance pool for declined risks due to difficulties faced by consumers to secure motor insurance at the prevailing tariff rates.

“The Bank subsequently sought and obtained the Government’s approval to implement staggered with limited incremental revisions to the tariff,” Bank Negara said. The tariff remains in place today.

In conclusion, the central bank said it firmly believed that the public interests were best served by continued progress on the reforms in the motor insurance market.

“Any decisions to review the arrangement independently of these reforms without taking into account consumers’ interest would prevent the public from enjoying timely settlement of motor insurance claims at reasonable costs and have confidence in the quality of repairs works. The Bank will continue to pursue a resolution of this matter in the best interests of the general public,” it said.

In its statement on Tuesday, MyCC chief executive officer Datuk Abu Samah Shabudin said PIAM and its 22 members were parties to an anti-competitive agreement to fix the parts trade discount at 25% for six vehicle makes - namely Proton, Perodua, Nissan, Toyota, Honda and Naza, and 15% for Proton Saga BLM model - as well as the labour hourly rate of RM30 for PIAM Approved Repairers Scheme workshops.

“The enterprises concerned have 30 days from the date of receipt of the proposed decision to make their representations in accordance to section 36 of the Competition Act.

“The MyCC will then make its final decision after it has considered the representations and all the available information and evidence,” it said.

Read more at http://www.thestar.com.my/business/business-news/2017/03/01/bank-negara-slams-myccs-decision-to-fine-piam-and-its-members/#mCxX7B7dvVUreTpI.99

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