Securing a holistic insurance coverage is essential to reduce the potential huge financial cost that comes later

by NURUL NAJMIN ABU BAKAR & ADRIAN PHUNG

“AN OUNCE of prevention is worth a pound of cure” is an idiom that advises us to prepare for unexpected situations such as accidents, floods, break-ins or fire.

According to a local report, a common and unfortunate occurrence frequently witnessed by many Malaysians is road accidents.

Malaysia has recently been ranked among the top three countries with the highest road fatalities out of 27 nations. On top of that, Malaysia recorded nearly 600,000 road accidents nationwide in 2023.

Apart from road accidents, flash floods are another common occurrence in Malaysia and the major floods in December  2021 and January 2022 further increased the importance of having insurance coverage.

According to a report from the Malaysia Deposit Insurance Corp (PIDM), only 54% of Malaysians possess insurance coverage.

Liberty General Insurance Bhd chief claims officer Ronnie Chan quoted the Department of Statistics Malaysia (DoSM) that the estimated overall economic losses from the floods in 2021 and 2022 were RM6.1 billion.

“From that amount, only 36% are covered by insurance, as reported by Bank Negara Malaysia (BNM).

“Insurance coverage is basically one party agreeing to compensate another for specified loss, damage or injury in exchange for a premium, offering customers a wide array of policy options tailored to their specific needs,” he told The Malaysian Reserve (TMR).

He added that as opposed to individuals or businesses bearing the full financial burden of a potential disaster, insurance ensures that the cost would be supported by the insurance company instead of the policyholder themselves.

Chan highlighted that major risks such as fire pose a significant threat to industrial businesses, and there would be certain insurance policies that not only cover initial repair costs but also address loss of profit during the restoration phase when operations are suspended, hindering revenue generation.

“Policyholders can feel assured that their assets are safeguarded continuously, thereby reducing the financial strain that arises in the event of unexpected incidents,” he explained.

Mohd Radzuan urges MTA customers to return the claim form to their takaful operator as soon as possible to kickstart the claiming process

Further highlight the importance of insurance coverage for floods, Malaysian Takaful Association (MTA) CEO Mohd Radzuan Mohamed said there is now increased awareness by motorists to extend their motor insurance.

“Based on the company’s first quarter of 2023 (1Q23) data, the flood take-up rate by 2022 is 10%.

“There is a slight increase of take-up rate attributed to heightened awareness among homeowners and households,” he told TMR.

Meanwhile, Pana Harrison (Labuan) Ltd country head Brian Hew also highlighted that more Malaysians are now aware of the need to include flood coverage within their insurance policies.

“According to our data, the most policies taken up by the public is motor insurance and about 30% to 40% took up natural disaster extension.

“This translates to every two in every three vehicles are without flood protection,” Hew said.

However, Chan said the General Insurance Association of Malaysia (PIAM) reported an increase in gross direct premiums of 10.3% to RM9.8 billion for the first six months of 2022 (1H22) compared to 1H21.

According to Hew, the most policies
taken up by the public is motor insurance and about 30% to 40% took up natural disaster extension Policyholders

Flood in Car Parks

Chan highlighted that vehicle owners can pursue an “own damage claims” against their personal motor insurance policies for vehicles damaged in a flood within car parks.

“However, the success of their claims is dependent on the inclusion of the ‘flood’ or ‘special perils’ coverage to avail compensation under the policy.

Insurance shifts the financial burden of potential disasters from individuals or businesses to insurance companies

“In the event that there are no avenues to pursue an insurance claim due to the lack of flood coverage in their motor policies, a claim can be pursued against the parking management or the shopping management, as they have the responsibility to ensure the premises are safe and proper.

“Where there are elements of failure on the part of the shopping management, a claim is likely to succeed. In most circumstances, shopping management has a ‘public liability’ policy in place to cover such contingencies,” he said.

For open car park areas, Chan explained that operators and landowners are completely responsible for any issues and compensation.

Following major floods in 2021 and 2022, more are aware of the need to include flood coverage within their insurance policies

This is because most open car parks are rented locations managed by individuals or third-party parking groups, therefore they must follow the terms of their agreement.

“To pursue a claim under this specific situation, the claimant’s intimations can be lodged against the parking operators,” he said.

‘Park at Your Own Risk’

For operators who have placed the “park at your own risk” disclaimer in their parking areas, Chan explained that while it may offer some defence in cases where damages or loss were not due to gross negligence on their part, it is still possible to pursue a claim against them.

“For this to be successful,  the claimant must prove that the disclaimer signage was not prominently displayed or beyond readable.

“However, the success in seeking compensation depends largely on the facts of the case or incident,” he explained.

Meanwhile, Hew emphasised that affected individuals can pursue a claim only if they can prove that the flood was caused by the parking operator’s negligence, such as when the water pump failed to remove excess water from the basement car park.

“Courts will rule that ‘park at your own risk’ does not absolve the operator from legal liability due to the act of negligence,” he said.

Policyholders are encouraged to
document their receipts for any valuable assets to ensure a smoother and quicker claims process, says Chan

Claiming Household Insurance

Chan highlighted that policyholders are encouraged to document their receipts for any valuable assets to ensure a smoother and quicker claims process.

“To ease the claiming process, we have introduced the first-of-its-kind ‘video appraisal’ technology to enable the expedition of claims processes within just two to three working days, from up to seven days previously.

“To further simplify the claiming process, the affected policyholders are not required to submit any documentation because upon notification, Liberty General Insurance personnel will virtually assess the damages and present a settlement offer,” Chan said, noting that the digital solution has helped led to a quick release of payments for the claimants and instant gratification at this time of need.

He stressed that it is essential for insurance companies to maintain flexibility and a proactive approach in addressing evolving risks within the property market.

As for those insured under Pana Harrison, Hew said receipt is one of the ways to prove possession and date of purchase.

“In the absence of a receipt, we can use warranty cards, user manuals, valuation reports for valuables, purchase orders or even the damaged item as proof of possession.

“Photographs of the items can also be used, provided the insurer/adjuster accepts them,” he said.

As for MTA, Mohd Radzuan advised policy-holders that once it is safe to return to the property, they should take photos of the damages and report the loss to their takaful operator as soon as possible.

“Avoid making repairs or disposing of damaged property until the takaful operator’s adjuster has assessed everything,” he said.

Insurance companies should maintain flexibility and a proactive approach
in addressing evolving risks within the property market (pic: MUHD AMIN NAHARUL/TMR)

Expediting Claiming Process

After unexpected events like fire and flash floods, Chan said it is imperative for all insurers to meticulously evaluate each claim request using a clearly outlined procedure to guarantee a fair assessment.

“As claim processes are time-sensitive, we also advise policyholders to understand the coverage limits and exclusions of their policies ahead of time to manage expectations and reach out to their insurance company for any clarifications.

“In the event of an unfortunate incident, policyholders must promptly contact their insurance provider to furnish necessary details and supporting documents for investigation by a loss adjuster,” he said.

Mohd Radzuan urged MTA customers to return the claim form to their takaful operator as soon as possible to kickstart the claiming process.

“If you have an inventory of your possessions, submit it with your claim along with any photos of damage, receipts, police reports or other evidence that documents the loss,” he said.

• This article first appeared in The Malaysian Reserve weekly print edition