Bank Negara Malaysia (BNM) has issued the Policy Document on Claims Settlement Practices (PD CSP) which sets out the minimum standards on the handling and assessment of general insurance and general takaful claims.
These standards must be met by licensed insurers carrying on general business and licensed takaful operators carrying on general takaful business (ITOs) as well as registered adjusters.
The PD CSP aims to ensure fair, transparent and timely outcomes in claims settlement practices through the imposition of regulatory requirements and expectations for ITOs and registered adjusters. This is to observe high standards of sound and responsible business conduct.
Another key objective of this policy document is to promote the wider adoption of digital solutions by ITOs to reduce friction, enhance efficiencies, and improve customer experience. This in turn will facilitate better management of claims costs and containment of fraud risk(s) by ITOs. In addition, this will contribute to continued access to affordable motor insurance/takaful by consumers in the long run.
Highlights
Key enhancements to the policy document relating to motor claims, aimed at achieving the desired outcomes and ensuring positive consumer experiences, include the following requirements for ITOs:
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the roles and responsibilities of the board and senior management in claims settlement practices;
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the need to publish and prominently display a Motor Consumer Service Charter (MCSC) in all of its branches and websites. The MCSC will outline, amongst others, turnaround times consumers can expect for their motor claims and criteria and thresholds for expedited claims, where applicable;
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shortened turnaround time for motor and non-motor claims settlement process;
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enhancing transparency in motor repair estimates by making assessments and recommendations of registered adjusters or in-house assessors accessible to repairers;
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maintaining high standards of professionalism and conduct for its in-house assessors. The ITO must ensure that its in-house assessors are adequately qualified and competent to perform objective assessments of motor claims and receive relevant training to stay updated with the latest technical, technological, environmental, and other developments in the motor ecosystem;
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advising policy owners/takaful participants with comprehensive coverage on the benefits and option to submit an Own Damage Knock-for-Knock (OD KfK) claim to expedite claims processing;
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ensure proper handling and assessment of Actual Total Loss (ATL) and Beyond Economic Repairs (BER) vehicles, including applying ATL and BER as distinguishable terms, consistent with corresponding definitions; and
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ensure fair treatment of consumers who purchase BER vehicles with respect to access to insurance/takaful coverage.
The PD CSP was issued on 1 July 2024 and will take effect on 2 January 2025 except for certain provisions.
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