The Consumers Association of Penang (CAP) welcomes the announcement by Bank Negara Malaysia (BNM) that it will be consulting all relevant stakeholders next month before presenting the proposed new third party bodily injury and death scheme to the government.
In August 2007, the Attorney General’s Chambers issued a Preliminary Issue paper proposing that a No-Fault Liability Scheme (NFL) be introduced. There were intensive discussions with all interested parties including BNM on the need for the NFL scheme.
At that stage that there was a consensus amongst the participants on the need for a NFL scheme and what remained to be done was setting up of a committee and appointing a consultant to draw up the scheme and formulate the legal framework. Regrettably there has been no progress on this matter for more than 2 years.
It is our hope that the new scheme proposed by BNM closely resembles the NFL scheme discussed 2 years ago. We badly need the NFL scheme to do justice to those people who are injured in accidents or dependents of those killed in accidents.
NFL scheme is better than the present fault based system whereby claims for compensation for personal injury or dependents or any other loss occasioned by motor vehicle accidents are made by instituting proceedings in court. The courts apply principles of common law negligence in determining fault and compensation. As a result, not every person injured in an accident receives compensation in spite of having to wait for a considerable period of time and spend substantial amount of money.
However the NFL scheme is much more than getting accident victims compensated as quickly as possible. It is based on the principles of community responsibility, comprehensive entitlement, complete rehabilitation, real compensation and administrative efficiency.
The NFL scheme is a good one as it has many benefits for example :-
- It would save time and money as accident cases would no longer be taken to court and affected persons would not face delays in payments from insurance companies. The public will save in court and lawyer fees and it will reduce the backlog in courts;
- It would reduce malpractices and corruption in the process of seeking remedies for those injured in accidents.
- The Government spends a considerable amount on paying interest on judgment sums. The NFL scheme would do away with delays and therefore, interest payments;
- Victims will be able to obtain funds promptly, and without the delays and hassles which accompany civil suits;
- Victims will also be able to receive prompt medical attention and treatment, especially since hospitals will be guaranteed payment;
- The availability of funds for payouts will be guaranteed by law;
- Victims of hit and run cases will be compensated
- Insurance companies will no longer be burdened with having to set aside funds to meet claims for personal injuries or deaths for periods up to 6 years;
- The police will have more time to concentrate on criminal cases
We believe an NFL scheme along the following lines can work :-
- Specific piece of legislation must be introduced to regulate the scheme.
- An agency along the lines of SOCSO or a state-owned corporation must be set up to run the entire NFL scheme.
- Problem with the funding for the scheme can be overcome by using existing insurance third party premiums and a portion of comprehensive insurance payments. If that it not acceptable than motorists can contribute to the scheme, as a compulsory payment to be made together with road tax or driving licence. The sum could be a flat rate of RM50 per year for each driver. Lastly funding can also come from SOCSO whereby a portion of the contribution made by employees and employers to SOCSO can be allocated for the NFL scheme.
- It should cover all accidents caused by all vehicles registered with the JPJ.
- Benefits should be payable to persons injured in an accident as a driver, passenger, pedestrian, motorcyclist or cyclist.
- However some classes of persons could be exempted from receiving benefits or in receive only limited benefits under the NFL scheme. Examples are persons injured in motor vehicle races or speed trials or persons convicted of drink or drug driving offences as a result of accidents.
- Benefits paid should cover cost of reasonable medical treatment as well as non-medical services and items required as a result of injuries suffered in the accident, loss of income/earnings and cost of rehabilitation.
- The problem of fraud can be mitigated by having a system of checks and balances.
- Road Safety and Accident Prevention should be given emphasis as it is the key to the long term viability of a no-fault scheme, As such, more aggressive campaigns must be aimed to increase awareness and change behavior, with a view to reducing road accidents and injuries.
Motorinsurance – let the Govt take over