Motor insurance liberalisation: why premiums differ between insurers now
Malaysian motor premiums are no longer set by a single tariff. Here is what liberalisation changed and why the same car can be quoted differently by two insurers.
If you have shopped around for motor cover recently and noticed that two insurers quote noticeably different premiums for what looks like the same car and the same driver, you are seeing the effect of a change that has been reshaping the Malaysian motor market for several years: phased liberalisation. Understanding what changed helps explain why comparing quotes properly now matters more than it used to.
From a single tariff to risk-based pricing
For a long time, motor premiums in Malaysia followed a common tariff, meaning insurers charged broadly the same rate for a given vehicle type regardless of which company you bought from. Liberalisation moved the industry away from that model in phases, allowing insurers and takaful operators to price motor cover based more closely on their own assessment of risk. Consumer education campaigns run by the industry describe this as "Phased Liberalisation 2.0," a joint programme by the General Insurance Association of Malaysia (PIAM) and the Malaysian Takaful Association (MTA) aimed at helping drivers understand a market where "car insurance has evolved from one-size-fits-all to fitting for your specific needs."
The practical result is that identical-looking cars can now attract different premiums between insurers, because each company weighs factors such as claims experience, workshop networks, underwriting appetite and add-on pricing differently. This is also why comparing quotes across two or three providers, rather than renewing automatically with the same insurer each year, has become a more meaningful exercise than it once was.
What still determines your premium
A few factors continue to drive the price you are quoted, whichever insurer you approach:
- No-claim discount (NCD). This reward scheme lowers your premium for every consecutive year without a claim. For a private car, NCD rates range from 25% up to 55% as set out in the policy, and different classes of vehicle carry different scales.
- Agreed value vs market value. Under an agreed value policy, the insurer pays the amount you and the insurer fixed at inception if your car is a total loss or stolen. Under market value, the payout is based on the car's depreciated value at the time of the loss. These can produce very different payouts on the same claim, so it is worth checking which basis a quote uses before comparing price alone.
- Betterment. When a damaged part is replaced with a new one during repair, betterment is the portion of the cost you bear because the vehicle ends up in better condition than it was before the accident. The industry applies a standard scale rising from no charge on a car under five years old to around 40% on a vehicle over ten years old, though you can buy a waiver of betterment as an add-on to avoid this.
- Excess. Most policies apply an excess, an amount you pay first on a claim before the insurer's share begins, and insurers often impose a higher excess on high-performance or high-risk vehicles.
Choosing between insurers under liberalisation
Because pricing now varies more between providers, the industry's own guidance encourages buyers to look beyond the headline premium:
- Check the network of workshops the insurer or takaful operator works with, particularly if you have a preferred repairer or location.
- Understand the claims process and transparency before you need to use it, including whether the insurer offers a digital roadside assistance app or similar tools.
- Ask what add-ons are actually available and priced separately, such as windscreen cover, special perils for flood and landslide, personal accident, and legal liability to passengers, since a cheaper base premium can be offset by pricier add-ons.
- Review your coverage type against your vehicle's age and value. Comprehensive cover is generally the most protective, but insurers may decline to offer it, or price it higher, once a vehicle passes a certain age.
Liberalisation has not removed the legal requirement to hold at least third-party cover under the Road Transport Act 1987; it has changed how that cover, and any additional protection you choose, gets priced across the market.
Talk to an advisor
With premiums now varying more between insurers, getting more than one quote, and understanding what sits behind the number, is worth the extra effort. An advisor can help you compare like-for-like coverage rather than just the bottom line. Find one through our advisor directory, or compare current motor plans at /compare/malaysia/motor.
Sources
This content is educational information from a licensed advisor, not financial advice. Product details vary by insurer — verify specifics with an advisor.
