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Bank Negara Malaysia plans to introduce a new scheme to cover third party bodily injury and death, which it has indicated will be finalised for implementation in the second half of 2010. 

The Malaysian Bar opposes this proposal, which in all likelihood will introduce far-reaching changes, as the changes would alter adversely the landscape of the motor insurance scheme to the detriment of motor accident victims, their families and dependants. 

The proposal seems to be driven solely by the insurance industry on the basis of profitability, without any consideration being given to public interest or social responsibility.  The working committees that have been established currently comprise solely industry groups, namely insurance companies only, indicating that profitability of the insurers is an overriding factor behind the proposed scheme.

The Malaysian Bar is disappointed over the lack of transparency and accountability on the part of Bank Negara, evidenced by its failure to reveal the mechanics, funding and operation of the proposed scheme. 

In addition, this major revamp of the existing motor insurance scheme is being proposed without any consultation of the relevant stakeholders, such as the Bar Council and public interest groups, or the public at large.

We are also concerned about the funding for the proposed scheme.  We estimate that the initial cost of setting it up will amount to RM500 million, and will very likely further burden the public.

The quantum for damages for personal injury claims is severely limited under the Civil Law (Amendment) Act 1984 and any further limits, in any form, would be to the detriment of the public and may include additional strain on our public healthcare system.

The Malaysian Bar calls on Bank Negara to provide full and frank disclosure of the details of the proposed scheme.  In view of the wide social and economic ramifications of the proposed scheme, the Malaysian Bar also calls on the Government to immediately engage and consult with all stakeholders and relevant segments of society, and to take their views into consideration before finalising the proposed reforms.

Furthermore, the function and discretion of the Courts in deciding on the issues of liability or quantum must be maintained.

The current tried-and-tested system functions well in Malaysia, especially with the present court system, as the administration of justice has been enhanced to expedite resolution of claims and to address issues of delay.  Recent improvements include the use of mediation in courts, the establishment of dedicated courts for accident cases and the introduction of guidelines on the quantum of awards to enhance consistency.

Rather than introducing a new scheme that favours the insurance industry, the focus should be on further improving the existing system, to increase its effectiveness and efficiency.

Ragunath Kesavan
President
Malaysian Bar
 
6 March 2010

Click here to download a copy of the Bar Council's "Memorandum on Proposed Scheme by Bank Negara Malaysia to Cover Third Party Bodily Injury and Death".