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KUALA LUMPUR Jan 27 -- Premiums for takaful or insurance coverage against floods will not increase, but instead will remain under control even if many people opt to buy the policies to protect houses and vehicles.
According to the General Insurance Association of Malaysia's (PIAM) board of directors, the demand for takaful and insurance coverage to protect against flood disaster is very low currently due to a lack of awareness.
“More people opting to get coverage will result in lower premiums due to competition among insurance companies offering more attractive packages,” board member Zainudin Ishak said in a webinar session titled “Importance of Flood Insurance/Takaful Coverage” jointly organised by the Financial Education Network, PIAM, and the Malaysian Takaful Association today.
Flooding is not new and will happen as a result of climate change, global warming and infrastructure development bottlenecks.
"Hence, takaful or insurance coverage for floods is important, no matter where we live, be it on high- or low-lying areas because there will be loss of properties and other unexpected losses after the floods.
“If we live on higher ground, the rise in water levels may not affect us, but our properties like cars and motorcycles may be impacted,” he said.
Zainudin, who is also the president and chief executive officer of Malaysian Reinsurance Bhd, appealed to the public to be cognisant of the fact that the government faces constraints in providing aid due to floods as there maybe many victims who need attention and support.
“Property losses from flooding are not small and can run into billions of ringgit,” he said, adding that in the 2021 floods, the cost of vehicle repairs, according to insurance industry estimates, was about RM1.3 billion, out of which, less than five per cent of those affected bought flood protection coverage.
“So, if we do not protect ourselves against floods, there's no chance for us to make claims...we have to bear the full brunt of the losses ourselves. It's better for us to take the opportunity to have coverage to safeguard our future,” he said.
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