Regulator intensifies calls for flood coverage amongst Malaysians
Regulator intensifies calls for flood coverage amongst Malaysians | Insurance Business Asia
Insurance News
Regulator intensifies calls for flood coverage amongst Malaysians
Onset of monsoon season is expected to increase the risks of flooding
Insurance News
By
Kenneth Araullo
The Persatuan Insurans Am Malaysia (PIAM) noted that the recent surge in torrential rain across various states in Malaysia has underscored the need for Malaysians to urgently take steps to protect their property and belongings and is particularly integral for a quicker recovery following flood incidents.
Floods are a recurrent natural disaster in Malaysia, notably during the monsoon season, leading to significant annual damages. According to the Special Report on the Impact of Floods in Malaysia 2021 by the Department of Statistics Malaysia, the country suffered losses totalling RM6.1 billion due to floods in late December 2021 and early January 2022. The onset of the monsoon season is expected to further elevate the risk of flooding.
Awareness about flood coverage has increased, as indicated by the rise in comprehensive motor insurance take-up rates from 12% to 14% in the first half of 2023. Despite this growth, there is a pressing need to further enhance awareness about flood risks and protection, particularly in the face of climate change and topographical alterations that have intensified flood threats.
The uptake of fire insurance with flood coverage also showed a slight increase, reaching 33% in the first half of 2023, up from 31% in 2022.
All members of the PIAM offer flood coverage extensions under comprehensive motor and fire insurance policies. These additional protections are available for an extra premium and are subject to each insurer’s underwriting criteria.
The regulator said that policyholders are urged to review their policies in detail and consult with intermediaries for precise information. Intermediaries can provide essential insights into the variations in coverage, terms, and conditions across different insurance providers. This ensures policyholders are fully informed about their coverage and can make decisions tailored to their specific needs.
The premium for flood extension coverage under a standard tariff policy for risks below RM10 million stands at 0.086%. To illustrate, a property insured for RM200,000 would incur an additional annual premium of approximately RM172 (about RM0.47 per day or RM14 per month), a relatively modest amount considering the protection it offers against flood losses.
Homeowners are also advised to consider houseowner insurance, which usually includes coverage for floods and other perils, and to add householder (home contents) coverage for comprehensive protection at an affordable cost.
A report by Malaysian Re notes that Southeast Asia is experiencing more frequent and devastating rainfall, likely a consequence of climate change. Given these developments, Malaysians are strongly advised to proactively protect their assets against floods, natural disasters, and fire. It is crucial for individuals to review their insurance policies to ensure they have adequate coverage that meets their unique needs and circumstances.
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