Bank Negara Malaysia releases policy document on claims settlement practices

It mandates minimum standards for licensed insurers and takaful operators.

Bank Negara Malaysia has issued a new policy document on claims settlement practices (PD CSP) effective 1 July.

The document mandates minimum standards for licensed insurers carrying on general insurance business and licensed takaful operators carrying on general takaful business (ITOs), as well as registered adjusters, in handling general insurance and takaful claims.

The PD CSP seeks to guarantee fair, transparent, and timely claims settlements by imposing regulatory standards and expectations on ITOs and registered adjusters.

Additionally, it aims to increase the use of digital solutions amongst ITOs to reduce friction, improve efficiency, and enhance customer experience.

The initiative is also intended to manage claims costs better, mitigate fraud risks, and ensure continued affordability of motor insurance and takaful for consumers.

Amongst the updated requirements in the PD CSP include clearly defining the roles of their board and senior management in overseeing claims settlement practices and requiring ITOs to prominently display a Motor Consumer Service Charter across all branches and websites. This charter outlines turnaround times for motor claims and criteria for expedited claims processing.

The updated policy also mandates shorter turnaround times for both motor and non-motor claims, ensure transparency in motor repair estimates through accessible assessments, maintain high standards for in-house assessors' qualifications and training.

Moreover, policyholders and takaful participants with comprehensive coverage will now be informed about the option to submit Own Damage Knock-for-Knock claims for faster processing. They must also handle actual total loss and beyond economic repairs vehicles distinctly and fairly.