GROWTH OF MOTOR INSURANCE
Vehicle first appeared on the roads in United Kingdom (UK) during 1880’s, but the first motor insurance is issued during 1890’s. Therefore it is almost 10 years time people use a motor vehicle as a mode of transportation without insurance coverage. Therefore, through their (insurer) experiences on other classes of insurance such as fire, theft & liability, they introduce the motor insurance towards the use of transportation. Then they emphasis it (motor insurance) on the subject matter which is the vehicle. Hence, they did it upon the drivers. At that time, insurer gave more weight or more concern about the drivers. They (insurer) will look into their (insured) experience especially young drivers. The early years of twentieth century, the formation of insurance company (composite office) is more emphasis upon motor insurance. Why? This situation arises due to increase in number of the vehicles use on the public roads. By their (insured) experience on fire, theft and liability insurance, they (motorist) placed most of the business with the composite office. Most of these composite offices are belongs to Accident Office Association (AOA). By the time being, AOA realized that their joint and several interests would best be served if they agree to adopt a set of guidelines and basic rates of motor insurance. Composite offices which subscribing with tariff agreement will pooled their statistics and set the minimum rates for the various classes of motor insurance. During the Second World War, the competition in motor insurance subsided because there are fewer vehicles in private use. This situation directly gives bad impact to motor insurance business. After a Second World War, people start to have their own vehicle for private use. This situation brings back the motor insurance business. The composite offices at that time which can best be defined as ‘mushroom’ aims for fast growth by offering lower premium and high rates of commission. They give the brokers to increase underwriting authority, prepare endorsements and to settle claims. Those companies didn’t have sufficient skills in maintaining the margin solvency and it is resulted in bankruptcies. Consequent, led to a greater control.
MOTOR INSURANCE IN MALAYSIA
In Malaysia, motor insurance business is regulated by Motor Tariff which formulated by PIAM. Therefore there is no motor insurance which is non-tariff unless specifically declared as such in the tariff and members of the association. On 1st November 1980, PIAM has imposed Cash before Cover. Hence, Inter-Company agreement on motor insurance imposed by PIAM at the end of 1985 is to restrict the commission allowable to intermediaries. PIAM also instructed its members in their motor insurance policy an authorized repairers list in ensuring that the policy cover is effective.
Road Transport Act 1987
Motor insurance in Malaysia is regulated primarily by the Road Transport Act 1987, as amended from time to time. These Acts deals not only deals with insurance but also with many aspects of road law such as licensing, registration, traffic offences, roads, regulations etc.
The objectives of the Road Transport Act 1987 are:-
* To make provision for the regulation of motor vehicles and of traffic on roads and other matters with respect to roads and vehicles thereon. * To make provision for the protection of third parties against risks arising out of the use of motor vehicles. * To make provision for the co-ordination and control of means of facilities for transport. * To make provision for the co-ordination and control of means of and facilities for construction and adaptation of motor vehicles. * To make provision for connected purposes.
Motor insurance is a security provided by an insurance company to the owner and / or driver of a motor vehicle against claims for damages and / or loss caused by the insured vehicle while...