Flood risk expected to increase 65% on climate change

As such, the public should be aware of having insurance or takaful policy coverage for their assets 

by NUR HANANI AZMAN / pic by MUHD AMIN NAHARUL 

THE flood risk in Malaysia is expected to increase 65% in the next 50 years as a result of the climate change which highlights the importance of having insurance or takaful policy coverage. 

Malaysian Takaful Association Management committee member Marcel Omar Papp said this is something that requires non-life insurance or general takaful operators to be more prepared as floods are expected to affect more people. 

“Despite the risk of flooding having increased, it is not necessary for the premium or contribution to increase. The premium for flood extension under the motor policies actually reduced by 30% in the last five years due to the fact that more people have bought the flood extension. 

“So, in case more people will buy flood insurance, potentially the price will come down. Since the risk is increasing, you better protect yourselves,” he said in a webinar on the “Importance of Flood Insurance or Takaful” organised by the General Insurance Association of Malaysia (PIAM). 

Meanwhile, PIAM board director Zainudin Ishak stressed that the motor policy with flood coverage is not only for someone who lives in an area that is expected to face the natural disaster because people will drive anywhere due to mobility. 

“For a motor policy, this is affordable protection. You just have to extend it. Find about floods and how to incorporate that into your protection,” he added. 

Expressing a concern on what will happen next, Zainudin said the massive flood indeed left a trauma to affected victims. 

“I suggest the public look at the need for protection. For the insurance industry player, our job is to engage the public and government agencies (our stakeholder),” he said. 

PIAM chairman Antony Lee stressed that awareness is important when it comes to insurance coverage which is not very expensive — it can cost around RM10 per year for a motorcycle. 

He shared an example of a seven years old Proton Saga 1332CC (sum insured RM19,000) will only cost the car owner between RM50-RM100 per year to add on flood cover premium. 

“A lot of people were not aware and sadly some of them bought it and decided not to renew it. That’s a wrong mindset. It is even dangerous for the small and medium enterprises (SMEs). When the flood happened, insurance came along with a lump sum of what SMEs insured for. 

“The speed of getting back on your feet again and recovering is important. The process to claim insurance requires seven to 14 days which is considered quick,” he said. 

He also said a whole nation approach is needed to handle massive floods better. 

It was reported recently that only 4% of the people nationwide purchased flood insurance coverage. According to PIAM, flood or natural disaster insurance coverage saw a downtrend as people tend to remove the coverage after a short period of time.