A price war and competition between insurance companies will likely heat up following the liberalisation of motor and fire tariffs with effect from 1 July 2017.
The prices for the products will be liberalised and ‘licensed persons’ will be able to determine the premiums or takaful contribution rates for them.
“Some insurance companies have started gearing up to secure market share now,” Actuarial Partners Consulting’s partner, Ms Nurul Syuhada Nurazmi, told the Bernama News Agency. She added that other insurers might cut rates to gain market share despite realising the rates were already low and unprofitable.
She said that insurance companies that are well-capitalised would be able to withstand the price war as they have enough buffer and profits to cover their deposits.
“Some companies which don’t have adequate money to pump in would sell off their businesses,” she said.
Ms Nurul said the liberalisation would encourage the increase in the number of new insurance products and customers but would also create competition. She said it was completely up to the insurance providers to price their products as they saw fit to attract consumers.