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I REFER to the letter by Fu Man Chu, “Evaluate Bank Negara’s TPBID proposal objectively” (April 23). The said letter was anything but objective. The fundamental importance of third party insurance is to protect the insured against a third party claim for damages in respect of bodily injury and death sustained in a motor vehicle accident. 

The writer seemed privy to a lot more information than what BNM has given relevant stakeholders to date, considering that BNM is still in the formulation process.

The writer should have been forthright and said the current scheme in place has “unlimited cover” for both the injured third party and the insured. This basically means there are no caps on damages claimable by the injured party. The new scheme in contrast has an overall cap of RM2 million.

This figure looks good on paper, but the fact remains that with the caps to the heads of damages, this “fictitious” figure of RM2 million will never be reached by any claim. To date, BNM has not been able to give stakeholders the relevant figures to the caps on the heads of damages.

Again, one wonders how the writer is able to understand the Newco, when BNM has not given specific details of the new scheme, save for saying it is a basic mandatory scheme, by which everyone would be covered. To a lay person, this gives the impression that the current scheme in place does not give mandatory cover to all third parties on the road.

If Newco starts off fresh without any liabilities, that would mean two concurrent schemes running at the same time for third party claims. This basically means taxpayers’ money would be used to set up the new scheme when there is already an existing scheme, tried and tested for 50 years.

Newco would be nothing more than another GLC with government funding.

In essence, Newco would be bailing out companies in the industry which have bitten off more than they can chew due to greed. If these companies took the risk, they should not be asking BNM to bail them out.

When these companies were making “fat” profits, did they think of giving back to the rakyat?

They did not. But now they expect the rakyat’s money to bail them out.

The only way Newco can bring down claims is by a draconian reduction of court awards. This is because if premiums do not go up, the only other way out is to cap the trend of reasonable court awards.

The writer speaks of reducing frictional costs but is obviously unaware of the practical realities.

The fact remains that an injured third party would have to seek the expert opinion of a specialist to ascertain the extent of his or her injuries. Who is going to bear the cost of the specialist? Must the injured third party forgo a specialist examination to save Newco money? How is Newco going to overcome delays with the police and the hospitals?

The question which begs to be asked is what has BNM been doing for the past 32 years? Are the rights of the rakyat to be sacrificed bec-ause it has been in “hibernation” and failed to advise the government that premiums should have been increased gradually to keep up with the rising cost of third party claims?

The answer cannot be at the expense of the rakyat.

Although BNM had consulted and sought input from “experts”, regretfully it offered only empty plates during the discussion with stakeholders. The standard answer given to all questions posed was that this was a basic scheme which would cover everyone.

Lastly, the writer mischievously says the Bar Council created a fuss because certain sectors of the Bar have a vested interest in third party claims and that lawyers fees take up 50% of the judgment sum meant for the injured party. Lawyers like other professionals earn reasonable fees in such cases – nothing close to the 50% suggested. The record of the Bar Council would speak for itself in that it has always spoken up in res-pect of public interest issues.

Apart from viewing the new TPBID scheme objectively, the BNM should be reminded of the old adage: “If it ain’t broken, don’t fix it.”

C.K. Ong
Kuala Lumpur