Monday, February 3, 2014

Motor Insurance 101 - What is ISM-ABI?

Have you wonder why the insurance agent asking you to insure your car more than the price you pay for it?

It is always no problem when nothing happens but when claim arises, consumers always complaint they were cheated or underpaid.

Let's look at the news published in November 2009.

Insurers to adopt new vehicle valuation system
7 November 2009, By Business Times
Insures and takaful operators have agreed to incorporate into their motor insurance policy a reference point to determine the market value of vehicles. Last month, both Bank Negara Malaysia and the General Insurance Association of Malaysia (Piam) endorsed Insurance Services Malaysia's Automotive Business Intelligence system (ISM-ABI). The ISM-ABI is the only approved system for vehicle valuation among financial services companies in Malaysia.

"The introduction of the new system for motor insurance is in line with practices in other developed markets," said ISM chief executive officer Carl Rajendram in Petaling Jaya yesterday. Rajendram said that most major motor insurers and takaful operators are in the process of adopting the new and more transparent system for motor insurance starting 2010. "It is part of the modernisation of Malaysia's motor insurance and takaful cover announced recently and will ultimately benefit the consumers, insurance and takaful companies," Rajendram said. "The entire automotive industry is moving towards greater competitiveness and efficiency and we are confident that the ISM-ABI will play a pivotal role in driving this objective among all stakeholders," he explained. With the new service from ISM, insurance and takaful companies now have the ability to generate renewal notices with the current year sum insured with the corresponding premium to be paid. "The services increase transparency in the whole motor insurance process not only for purchasing insurance but also during claims," Rajendram said.

With the new system from ISM, insurers and takaful operators may also choose to pre-determine the compensation upon theft and total loss claims by referencing the database. "Consumers are also able to verify the vehicle's market value themselves from the website and access the same information that insurers are accessing," he said. The new service will reduce uncertainty when insuring a vehicle and reduce dissatisfaction that consumers experience when making a claim.