The cost of delay in settling claim for insurance company

The cost of delay in settling claim for insurance company

Malaysia’s consumers generally feel insurance companies are more efficient in collecting premiums than handling insurance claims. I can’t deny that claims issues is one of the reasons why some people still insist not to buy insurance in Malaysia. However, things have started to improve since Insurance Act 1996 took place.

Insurance Act 1996 - Section 161
Insurance Act 1996 protects consumers’ interest. In this article, I would like to share with you Section 161 of the Act which explains the Interest of Policy Money. The Act stipulates if the insurance company does not pay out a claim within 60 days of receipt of intimation of the claim, the insurance company shall pay a minimum compound interest of 4% on expiry of the 60 days until the date of payment.

How does Section 161 work
For example, if an insurance company delays in settling a RM 200,000 sum assured insurance claim for 300 days, it will cost the insurance company RM6, 575 of interest.

The calculation is:

Number of days delay
-------------------------- x interest rate (%) x sum assured (RM)
365 days

300
= ------ x 4% x RM 200,000
365

= RM6, 575

Conclusion
Your right as a consumer in handling claims with insurance company is clearly stated under Section 161 of Insurance Act 1996.


(I hope you can share your claim experience with the readers of this blog. Let them learn from your experience. To share is to care)


**Posted to www.MalaysiaInsuranceGuide.blogspot.com on 23 September 2006, 11:00pm, Malaysia time**