What Exactly is Motor Detariffication?
In simple terms, detariffication is the removal of fixed price lists (tariffs) set by regulators. Before this, BNM told insurance companies exactly what to charge based on a rigid table.
Today, insurance companies have the freedom to set their own prices based on "risk-based pricing." This means that the price you pay is tailored specifically to your profile rather than a generic category.
Think of it like buying a flight ticket. Two people on the same plane pay different prices based on when they booked and their baggage needs. With car insurance, two people with the same Honda Civic will pay different premiums based on how "risky" the insurer thinks they are.
How Your Car Insurance Premium is Calculated
Under the old system, only two things mattered: how much your car was worth (sum insured) and how big your engine was (CC). Now, insurers look at a whole list of factors to decide your price.
| Factors | Old Tariff System (Pre-2016) | New Liberalised System |
|---|---|---|
| Vehicle Age & Value | Yes | Yes |
| Engine CC | Yes | Yes |
| Driver’s Age & Gender | No | Yes |
| Driving Record / Claims History | No (Only NCD) | Yes |
| Location (Parking/Driving) | Limited | Yes (High-theft areas pay more) |
| Safety Features (ADAS, Dashcams) | No | Yes (Discounts for safer cars) |
| Occupation | No | Yes |
(Note: Every insurer uses a different "scorecard," so it pays to shop around! Please verify the latest rates on official insurer websites before renewing your policy.)
Does This Mean Insurance is Getting More Expensive?
The honest answer is that it depends on your driving habits. Detariffication is designed to be fair. If you are a safe driver who stays away from accidents, you are considered "low risk."
Insurers want you as a customer, so they will offer you lower, more competitive rates. On the flip side, if you have a history of speeding tickets or frequent claims, your premium will likely be higher.
If you drive a car model that is frequently stolen in areas like Klang Valley or Johor Bahru, you might see a price hike. The "bad" drivers are no longer being subsidised by the "good" drivers.
4 Ways to Lower Your Insurance Premium
Since the market is now liberalised, you have the power to influence your price. Here is how you can play the game to your advantage:
1. Shop Around and Compare
Because every insurer (like Zurich, Kurnia, or Generali) now uses their own risk formula, the price difference for the same car can be hundreds of Ringgit. Don't just auto-renew with your old agent. Use comparison platforms to see who is offering the best deal for your specific profile.
2. Telematics and "Pay-As-You-Drive" (PAYD)
In 2026, many Malaysian insurers offer telematics insurance. By installing a small device or using a mobile app, the insurer tracks your mileage and driving behavior like braking and speed. If you drive less or drive safely, you can get a rebate of up to 20-30% on your premium.
3. Boost Your Car's Security
Is your car parked in a locked compound? Do you have a professionally installed GPS tracker or a high-quality dashcam? Mention these during your application to reduce your risk profile.
Insurers view these as risk mitigators and may offer a discount because your car is less likely to be stolen or involved in an unverifiable accident.
4. Maintain Your No Claims Discount (NCD)
Your NCD remains the most powerful tool for savings, reaching up to 55% after five years of claim-free driving. With detariffication, some insurers might even offer additional "loyalty" discounts on top of your NCD if you’ve been a safe driver for a long time. This makes your clean record more valuable than ever.
Frequently Asked Questions (FAQ)
Q: Is Third-Party insurance still available?
A: Yes, Third-Party, Fire and Theft (TPFT) and basic Third-Party policies are still available, but their prices are also now subject to risk-based pricing rather than a fixed tariff.
Q: Why did my premium go up even though I have 55% NCD?
A: This could be due to external factors like an increase in the car's market value or your residential area being reclassified as a high-flood or high-theft zone.
Q: Does my occupation really affect my car insurance?
A: Yes, some insurers believe certain professions involving lots of late-night driving carry higher risks than traditional office-bound jobs.
Q: Can I switch insurers easily under the new system?
A: Absolutely. Your NCD is tied to your IC number or Company registration, not the insurer, so you can take it to any company to get a better price.
Conclusion
Motor detariffication might sound like a complex financial term, but it’s actually a win for most Malaysians. It encourages us to be better drivers and gives us the freedom to choose a policy that fits our budget.
Before you renew your road tax this year, take five minutes to see what else is out there. You might find that being a good driver finally pays off in cold, hard cash.
Compare your car insurance options with Loanstreet’s comparison tool to see which insurer gives you the best deal today.
