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Insurance sector plays a vital role in the society as it provides assurance and security relating to any loss or damage which might be suffered. It is therefore the reason that the industry is subjected to numerous amendments considering the changing scenarios and also to bring about more efficiency and more security to the clients. The company which is considered for this assessment has been able to develop a niche environment in the market offering variety of insurance products depending on the nature of insurance which is required by the clients. The company has also made a name for itself in the market and it has become one of the priority choices for clients for the purpose of getting insurance (Tselentis, Yannis and Vlahogianni 2017). The insurance industry, especially insurers, is one of the most regulated commercial entities due to the overall impact which it has on the society as a whole. Therefore, it is common that legislative and regulatory changes are made for making improvements in the insurance process. The Business of AXA general insurance Malaysia is considered which provides all kinds of insurance products such as life, insurance, home insurance, total or permanent disability insurance and motor insurance (Lemaire 2013). The motor insurance products would be considered for this assessment as it is one of the largest insurance sector in the country which is mainly due to the fact that Motor insurance in Malaysia is mandatory (AXA Malaysia. 2019). This also means that no vehicle which is not insured cannot drive on public roads. This is done in order to promote safety and security of the client as well as the third parties.
The insurance industry has been subjected to a variety of changes due to new regulations and amendments which are brought about by the management of the company during the period. The business which is considered is regarded as one of the top insurance companies which is operating in the country. In order to manage the claims of different insurance products a separate team is assigned the responsibility. The claim staff members have also been trained properly so that efficiency is maintained in handling claims and overall costs is also reduced. Any amendment in the insurance laws also affects the claim handling process which would be the main matter of discussion in this assessment. In addition to this, the changes which occurred in day to day handling of the claims associated with insurance would also be discussed in brief. The discussion would also be including recommendation which is suggested to the insurance sector so that more efficiency can be brought about in their operations.
There has been changes which have brought into the insurance industry which is mainly brought about so that the experience of the insurer is improved and a fairness in maintained in the dealings. One of the major points which is to be remembered in case of motor insurance in Malaysia is that the same is mandatory in nature which is mainly due to the regulations which was brought about by under the Road Transport Act 1987. The act further requires all motor vehicle which is used in roads to be registered in terms of insurance (RinggitPlus. 2017). The legislative changes in the motor insurance products are always brought about for bringing about more efficiency in the operational process of the business. The legislative changes which have been brought about in motor insurance are discussed below in details:
The coverage which was provided by general motor insurance has slightly amendment as different types of coverage options are available. The first is the minimum cover which is available to clients under the provisions which is stated in Road Transport Act 1987. Then there is the third-party coverage which mainly focuses on providing claims to third party due to any accident or property damage caused by the insurer or the client. These slight amendments also affect the claim procedures as special emphasis then needs to be provided on the type of insurance and coverage available to the client before settling the claims (Thoms and Holden 2016). Another major insurance which is taken by most of the clients is insurance against car theft.
In case of AXA general insurance, the claim procedure which is established for theft insurance by the company after the amendment is described in three steps which are:
Therefore, it is apparent that even minor changes in the insurance regulations can also affect the claim settlement procedure which is followed by a business.
This is another major regulation which was brought about in July 2017 for making the insurance structure more transparent and flexible in relation to Motor Insurance. The major amendment is the introduction of the rule of de-tariffication which allows insurance companies to set up their insurance products for the clients on the basis of the nature of the risks which is faced by the client and the sum which is to be insured by the client. In other words, effective from 1st July 2017, motor insurance in Malaysia will be de-tariffed. Insurance companies will be able to practice risk-based pricing and use their own method to calculate premiums for car insurance, based on the risk profile of the customer (Yusuf and Ajemunigbohun 2015).
The business of AXA General insurance also made changes in the motor insurance products which is followed by the business considering the new de-tariffication rules. The new de-tariffication regulations can be an advantage for the clients as well the insurer company as a risk-based approach is considered for determining the premium and claims which is associated with the insurance policy (Suriadi et al. 2013). Due to this de-tariffication rule, the claims which is related to a motor insurance would also alter and would be required to be calculated separately for different individuals. The new ruling provides more emphasis on the profile of driver and also the car type in order to decide the premium which is to be incurred and accordingly also decide the claims which the company needs to incur in case of any losses or damages.
The claims are the returns which a client receives from an insurance company in case of any damages suffered by the client. However, the claim process is quite complex and a detailed scrutiny and investigation is required for ensuring that the claim for damages is genuine. The new insurance amendment provisions which are going to be implemented would change the outlook of the motor insurance sector and provide better coverage for any damages which is sustained. The major changes which has been brought about by the new regulations focuses on making the insurance products relating to motor insurance more flexible.
The changes in the types of coverage provided in respect of Motor insurance made changes to claim handling process in 4respect to different types of coverage. For instance, if there is a theft insurance of motor vehicle than a m0ore detailed investigation route is to be followed by the company which also forms part of claim handling process (Embrechts, Klüppelberg and Mikosch 2013). In the case of AXA general insurance company changes have been made in the term in which the claim is actually to be settled. Moreover, the period which is set for settling the claim in case of theft insurance AXA General Insurances is 2 months. In case of other types of coverage, the claim settlement period would be reduced. Therefore, different types of coverages have different types of claim settlement process which can be considered to be one of the major changes which have been brought about after the amendment.
The major change in regulation was the de-tariffication rule which allowed companies to recalculate the premiums and claims which a client would be entitled to depending on the risks which is faced by the client. The meaning of de-tariffication is to free up fixed premium rates and charge rate of premium as per the estimation of the insurer company. This rule allowed companies to calculate their own tariffs for premiums and the regulation also ensured that proper coverage was provided to the clients who faced high risk (Baecke and Bocca 2017). The regulation was also convenient for the clients as such approach also can reduce the premiums which the client had to pay judging from the risks which is faced by the client. The rule of de-tariffication also made changes to the claim handling process which is followed by insurance companies. The changes occurred in the method which was used by the business for computing the claims for a client. In case of AXA general insurance, the claims and the premium computation is based on the driver’s profile and also the nature of the car which is used by the client. The business provides 5 days claim approval for its client, 24/7 services in respect of repairs with numerous repair stores around the area. In addition to this, the company also provide personal accident coverage if the same is taken by the client (Elbers et al. 2015). The analysis shows that significant changes have been brought about in the claim handling process due to the introduction of the new de-tariffication rulings.
The legislative and regulatory changes which have been brought about in the insurance industry has also affected the claim handling process which is followed by the business. The introduction of new amendments in the motor insurance area effectively reduces the work load of claim handlers and makes handling procedure for claims a much easier process. The new regulations which is brought about in the insurance product would help the insurance company to take full advantage of the de-tariffication rule allow the insurance companies to appropriately manage the insurance covers of the companies (Antonio and Plat 2014).
The claim handling process would become more systematic after the de-tariffication rule but at the same time it would also become more vigorous for the staff members who are given the responsibility of handling the claims of the business. The amendment which is related to different type of coverage available to a client effectively makes the claim handling process more systematic in nature as the staff would have consider the nature of coverage driver’s profile and also the nature of his car for determining the claim which is payable to the client (Mwangi and Iraya 2014). For instance, in AXA General Insurance, there is a different process for claim in relation to theft and claim in relation to accidents. The claim approval period for theft is much longer in comparison to claim approval period for accidents. Therefore, it is clear that new amendment has changed the perception of Motor vehicle insurance and made changes in the daily claim handling process which is followed by a business.
The legislative change of introducing the de-tariffication rule also has a major impact on the claim handling process. The claims are computed based on the risks which was faced by the client. In the computation of the claim driver’s profile, claim history and nature of the car would also be considered. For example, if the client owns a very expensive car than it is natural that the coverage would be more and if any damages occurs to the same than the client would want more in terms of claims (Mobarak and Rosenzweig 2014). The most beneficial aspect of the introduction of de-tariffication rule in the motor insurance sector is that the daily claims which is to be handled by the insurance company would be unique which means that the rate of premium or claim offered can be different for different companies. In other words, it is quite possible for businesses to offer different claims for the same coverage as the de-tariffication rule allows the same. The claim handling process depends on the nature of the insurance cover which is taken and also the nature of loss which is suffered. The claim handling would be supported by the new amendment which is brought about by the de-tariffication. One of the major changes which has taken place due to the amendment in insurance schemes is that the claim handling process has become more time efficient. Earlier it was a practice in a business to approve claims relating to any damage after a period of 30 days which has now reduced to around a week time. Most of the companies are following such a time gap so that the customers can get access to their claims immediately. In case of AXA general insurance company, the company promises to approve claims within a period of 5 days if the claim is genuine and the claim is not for theft. This shows that the business has effectively responded to the needs of the clients and reduced their claim period which would attract more clients to the business. Therefore, it is clear that significant changes have brought about in insurance products which is followed in a business.
The benefit is available for both the companies and the clients due to the de-tariffication regulation and therefore it can be said that the amendment has been brought for benefit of all parties (Krueger and Ludwig 2016). The amendments which have been brought about in Motor Insurance products have made the claim handling process more efficient and also has led to a reduction in delay in handling the claims of the business.
The new regulations which have been brought about in the motor insurance sector deals with the introduction of the de-tariffication which have been brought about in the insurance sector (Lemaire 2013). The main amendment is that the rule takes away the power of setting tariff by the Bank Negara and also invokes their right to control motor insurance premiums. Instead, it provides the insurance companies with the power to set its own tariff and premiums on different insurance products which is offered by the business. The insurance companies can further improve the claim procedure by making improvements in the tariff rates as per their requirements of de-tariffication regulations which was introduced in 2017. The tariff rules and different types of insurance coverage which have brought about in the motor insurance have made the insurance sector much more transparent. However, more improvements can be brought about in the insurance sector in order to bring about more transparency and flexibility in insurance sector. Some of the recommendation which is suggested are listed below in details:
The claim management policies of an insurance company can be improved if following measures are adopted by a business. These measures would bring about efficiency and transparency in the claim procedures and day to day handling of claims. The measures would make the work process of the business easy as well as ensure that the clients are happy with the insurance company.
The report effectively shows the important of the legislative amendments which were brought about in the motor insurance and how the same contributed to the overall efficiency of managing the operations of the business. The report considers the business of AXA General Insurance which is engaged in insurance sector and provides numerous insurance products to the customers. The assessment goes into detail as to how the legislative changes affected the claim procedure which is followed by the company. In addition to this, the report also shows analysis of the changes which took place in day to day handling of claims after the amendment was brought in. The changes in claim procedure are specially highlighted after the de-tariffication rule of 2017. In addition to this, the assessment also provides some recommendations which can help the insurance sector to become more transparent and bring about flexibility in their operations.
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