I read a report that an insurance company increased the premium for motor insurance by 400% on its renewal. The motorist is not able to get another insurance company to accept his risk. Is it fair for the premium to be increased by so much?
The increase of 400% is excessive. The authority should set some reasonable cap on the increase in premium on its renewal. An increase of 100% is already too high. The customer should not be placed at the mercy of the insurance company. The consumer should lodge a complaint with the Consumer Association (CASE) to take up this matter.
An alternative arrangement is for MAS to set up a residual market (or pool) for motorist who are not able to get insurance from the standard market. The premium rate for the residual market is higher, but cannot be excessive. The risk is the residual market is shared by the insurance companies in proportion to their share of the market.