On 23 Oct 2009, the Prime Minister, in his Budget Speech for 2010, made a reference to a revamp of the motor insurance scheme in the country, which was to be finalised by mid–20101. On 17 Nov 2009, the Governor of Bank Negara Malaysia (“BNM”), Tan Sri Dr Zeti Akhtar Aziz, indicated in her keynote address at the Financial Industry Conference that “recommendations for the implementation of a new scheme for basic motor insurance cover, which would also address developments in motor underwriting and claims practices, would be finalised in the second half of 2010”. In January 2010, the Chief Executive Officer of an insurer stated that the scheme would take effect soon during an interview with BFM radio station.
Concerned Members of the Bar who had no notice or knowledge of any review met for informal discussions and later consulted the then–President of the Malaysian Bar, Ragunath Kesavan, on the issue. Ragunath Kesavan not only agreed to form a national–level committee to address the proposal, he went on to co–chair Bar Council the Motor Insurance Review Ad Hoc Committee (“MIRAC”), formed in early 2010.
MIRAC attempted to obtain details of the proposed revamp from major stakeholders such as the insurers and BNM, but was unable to obtain any concrete response, and was given to understand that the working groups related to the proposal comprised only the insurers.
On 6 Mar 2010, Bar Council issued a press statement in which it officially objected to the proposed revamp for a number of reasons and requested for full and frank disclosure of the proposal2. Bar Council also submitted a memorandum on this issue to BNM3. This was followed by the adoption of a resolution on this issue at the Malaysian Bar Annual General Meeting on 13 Mar 20104. MIRAC then embarked on a number of meetings with interested parties, including Members of Parliament from coalitions and the Backbenchers Club, and attended a roundtable meeting with consumer groups, representatives from the transportation industry and other non–governmental organisations.
On 24 Mar 2010, BNM responded with a press release, stating that they would be engaging with stakeholders and hoped to implement the scheme by the third quarter of 20105. Around the same time, the Second Finance Minister gave a statement that the proposal included the formation of a new company to oversee motor insurance6. In April 2010, BNM and representatives from the Ministry of Finance held joint briefings on the proposal for stakeholders such as the Bar Council, consumer groups and insurers. BNM also went on to request public feedback on the proposal with a deadline on 14 May 20107. On 21 Apr 2010, Bar Council released a press statement objecting to the proposal and calling for a cross–industry working committee on this area8. Bar Council went on to submit a formal memorandum opposing the proposal9. In June 2010, BNM announced that it would delay the implementation of the proposal pending a study of the feedback received. In July 2010, Deputy Finance Minister Senator Datuk Dr Awang Adek Hussin stated that the proposal would be implemented in 2011.
Efforts by MIRAC members to oppose and increase awareness of the proposal included meetings with Dato’ Seri Tiong King Sing (Barisan Nasional Backbenchers Council), YB Dato’ Seri Mohamed Nazri b Abdul Aziz (Minister in the Prime Minister’s Department), Datuk Seri Dr Chua Soi Lek (President, Malaysian Chinese Association (“MCA”)); and representatives from Parti Islam Semalaysia (“PAS”), Democratic Action Party (“DAP”), Parti Keadilan Rakyat (“PKR”) and CUEPACS; and many others. Other activities included giving media interviews, including a live interview on NTV7’s Breakfast Show on 7 June 2010 with Co–Chairpersons Ragunath Kesavan and Jude Raj. State–level briefings on the proposal were also carried out to inform lawyers in all states.
In early 2011, BNM announced that it would not be proceeding with the proposal but would instead be embarking on a review of the current framework which would include a joint working committee with key stakeholders such as the police, hospitals, consumer groups and the judiciary. BNM then went on to form the Joint Working Committee on Efficiency Enhancement Measures in Motor Claims Settlement (“Joint Working Committee”). The inaugural meeting of the Joint Working Committee took place on 7 Apr 2011. The meeting was attended by representatives from Bar Council, the Attorney General’s Chambers (“AGC”), Judiciary, Ministry of Health, Polis Diraja Malaysia, Consumers’ Association of Penang (“CAP”), Federation of Malaysian Consumers Associations (“FOMCA”), Malaysian Motor Insurance Pool, Persatuan Insurans Am Malaysia (“PIAM”), Takaful Malaysia and other transport associations.
Members of the Joint Working Committee initially wished to review the contingency fee structure or system for legal fees in motor insurance cases. After much discussion, it was agreed that this issue would be resolved between Bar Council and the AGC. We have been made to understand that the Drafting Department of AGC is reviewing the proposal forwarded by Bar Council on this matter at the moment.
The Joint Working Committee has been overseeing the setting up of the Nationwide Call Centre (“NWCC”) as well as the formulation of a Motor Insurance / Takaful Claims Guide (“Guide”). The Guide is essentially an information pack, meant for motorists and consumers who have been involved in motor vehicle accident, which provides guidance on the aspects of Motor Insurance and Takaful coverage, and educating them on available ways to make a Motor Insurance or Takaful claim. At present, the Guide has received its approval from Bar Council and the Joint Working Committee, and BNM is currently working progressively on producing it in four languages, namely, English, Bahasa Malaysia, Tamil and Chinese. The English version of the Guide is accessible here.
The framework for the NWCC, which is essentially a call centre that directs or links victims of motor vehicle accidents to the nearest hospital or panel workshop, has been set in place under the supervision of the Joint Working Committee. Initially, it was proposed that it would be run by adjusters but after strenuous objections from Bar Council, it is now to be run by Telekom Malaysia. NWCC has been renamed “Accident Assist” and has been rolled out in the Klang Valley10, but is still at the soft launch stage. The programme is slated to be expanded to Penang and then the rest of Malaysia.
As it stands, Bar Council remains committed to working with all relevant parties within the Joint Working Committee in furtherance of the interests of members of the public and the Bar.
Jude Celestine Raj and Gnasegaran Egamparam
Motor Insurance Review Ad Hoc Committee