PERSATUAN INSURANS AM MALAYSIA (General Insurance Association of Malaysia)

3rd Floor, Wisma PIAM, 150 Jalan Tun Sambanthan, 50470 Kuala Lumpur, Malaysia

Tel: 603 22747399 Fax: 603 22745910 Email: piam_sec@piam.org.my

REPLIES TO THIS CIRCULAR ARE ESSENTIAL

MEMBERS CIRCULAR NO: 109 OF 2011

24th June 2011

BY CDS

The Chief Executive Officer Dear Sir, Federation of Automobile Workshop Owners Association of Malaysia (FAWOAM) We refer to Members Circular No. 37 of 2011 dated 11th March 2011 on the above matter, a copy enclosed (without attachment). We would advise that all the responding member companies (21 companies) were agreeable to the Management Committees recommendations for Parts Discounts and Labour Rates as stated therein. We had subsequently made the proposal to FAWOAM, however, the proposal was rejected by FAWOAM and they have made counter proposal (via their letter of 3rd May 2011) for our consideration. Following the request from FAWOAM and a meeting was held with them recently, the Claims Management Subcommittee has further reviewed the proposal and suggested that for parts discounts for BLM Saga be compromised at 15% and as for Labour Rate, the rate be increased to RM30 per hour and to leave it open for member companies to apply either Thatcham Repair Times or Opinion Times as currently practice pending review of Thatcham Repair Times. For ease of reference, we append below the initial proposal made to FAWOAM, FAWOAM counter proposal and also the suggestions by the Claims Management Subcommittee on the counter proposal made by FAWOAM. 1) Parts Discounts

Initial Proposal by PIAM (based on feedback from members via Members Circular No. 37 of 2011)

25% parts discount for the six vehicle makes namely Proton, Perodua, Nissan, Toyota, Honda and Naza except for Proton Saga Base Line (BLM) model at 20%.

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(General Insurance Association of Malaysia) 3rd Floor, Wisma PIAM, 150 Jalan Tun Sambanthan, 50470 Kuala Lumpur

Telephone: 603-22747399(Hunting Line) Fax: 603-22745910 E-mail: piam_sec@piam.org.my

REPLIES TO THIS CIRCULAR ARE ESSENTIAL

MEMBERS CIRCULAR NO: 37 OF 2011

11th March 2011

The Chief Executive Officer URGENT

BY CDSDear Sir, Federation of Automobile Workshop Owners Association of Malaysia (FAWOAM)

The Federation of Automobile Workshop Owners Association of Malaysia (FAWOAM) has made representations to the Association mainly relating to review of the pricing of the cost of repairs to accident cars for workshops under the PIAM Approved Repairers Scheme (PARS). Bank Negara Malaysia is involved in chairing the discussions. In a recent meeting, provisional offers and counter-offers were made but no final agreement has yet been reached with FAWOAM. For members information, the Management Committee has noted the discussions with FAWOAM and endorsed the recommendations below of the Claims Management Subcommittee as final offers to FAWOAM:- 1) Parts Discounts Initial proposal by FAWOAM : PIAM to consider introducing a maximum parts

discount of 20% as a guide for six vehicle makes (Naza, Proton, Perodua, Nissan, Toyota and Honda)

Provisional offer from PIAM : 25% for the six vehicle models Rationale of offer: a. Based on surveys by subcommittee members, workshops get up to 30% 45%

trade discounts from stockists for franchise parts. b. If workshops use OEM parts, the cost is less than if sourced from franchises. c. Use of imitation and recon parts are very common but difficult to detect due to

impracticality to conduct full-scale pre-painting inspections. d. Current maximum discount applied by some insurers is 30%.

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mailto:piam_sec@piam.org.my

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Counter-offer by FAWOAM : Agreeable to above but requested that for 2 makes, Proton & Perodua, parts discounts be capped at 20%.

Revised offer endorsed by Management Committee:

25% for the six vehicle makes, except for base line model (BLM) Saga model at 20%.

2) Labour Rates

Request by FAWOAM : RM45 per hour Provisional offer from PIAM : RM25 per hour but to maintain Opinion Times Rationale of offer

a. FAWOAMs initial complaint was that some insurers pay RM20 hourly rate. b. From survey of subcommittee members, current hourly rates range from

RM25-35 except 2 members who pay RM20.

Counter offer by FAWOAM : Agreeable but strictly follow Thatcham Repair Times.

Revised offer endorsed by Management Committee:

In view that it is the industry which has imposed the use of the MRC system, Thatcham Repair Times should be followed. However, opinion times should be allowed to take into account local conditions. Periodic reviews of the Thatcham Repair Times should be carried out together with an independent organisation, such as the Association of Malaysian Loss Adjusters.

Members are requested to provide your urgent views and comments on the above for consideration by the Association. Kindly revert with your response in the attached reply form to the Secretariat by Friday, 18th March 2011. Thank you. Yours faithfully, BY ORDER OF THE MANAGEMENT COMMITTEE THIS IS A COMPUTER GENERATED DOCUMENT AND NO SIGNATURE IS REQUIRED SECRETARY DISTRIBUTION:- Member Companies EL/MR/nh

Name & Signature of CEO/Authorised Signatory

JainurahFile AttachmentMC_00037_11.pdf

Page 2 FAWOAM Counter Proposal (3rd May 2011)

For all Proton and Perodua Brand: Trade Discount = maximum 20% (Except Proton BLM Saga - maximum 10%).

Toyota, Honda, Nissan, KIA and Hyundai Brand: Trade Discount = maximum 25%.

Recommendation by the Claims Management Subcommittee

25% for the six vehicle makes namely Proton, Perodua, Nissan, Toyota, Honda and Naza and 15% for Proton Saga Base Line (BLM) model.

Rationale of the Claims Management Subcommittee recommendation:

i) Proton and Perodua to remain 25% taking into consideration volume of the vehicles on the road and there is still profit margin for the workshops for bulk purchase and balance transactions (plus-minus) on overall models.

ii) As for BLM Saga, the Subcommittee agreed to compromise at 15% as workshops can get up-to 20% parts discounts and furthermore the volume is small.

2) Labour Rates

Initial Proposal by PIAM (based on feedback from members via Members Circular No. 37 of 2011)

RM25 per hour but to maintain Opinion Times.

FAWOAM Counter Proposal (3rd May 2011)

Minimum RM30 per hour on the condition of:- i) Any body parts which are replaced using new parts, Thatcham Times

on M.E.T., Panel and Paint should be adopted and it is final. ii) Any body parts which are under repaired, an Opinion Time should be

allowed but upon negotiable with adjuster. iii) All labour items should be itemized and no lump sum approval is allowed. iv) Strictly follow the BNM JPI 14 guideline, where Thatcham Times should

be used and practiced to reduce subjectivity.

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Recommendation by the Claims Management Subcommittee RM30 per hour but to leave it open for member companies to apply either Thatcham Repair Times or Opinion Times as currently practice pending review of Thatcham Repair Times. It was proposed that a Committee comprising of Members from PIAM, Association of Malaysian Loss Adjuster (AMLA), MRC and FAWOAM be formed to review the Thatcham repair times and ascertain a suitable benchmark for the local environment.

Members are requested to provide your urgent views and comments on the above for consideration by the Association. Kindly do revert with your response in the attached reply form to the Secretariat by emailing to barani@piam.org.my or fax to 03 2274 5910 by Monday, 4th July 2011. Thank you. Yours faithfully, BY ORDER OF THE MANAGEMENT COMMITTEE

(THIS IS A COMPUTER GENERATED DOCUMENT AND DOES NOT REQUIRE A SIGNATURE)

SECRETARY

Distribution:- Member Companies MR/BDS/nh

REPLY FORM

The Secretary

Persatuan Insurans Am Malaysia

P.O. Box12555

50782 Kuala Lumpur

(Fax No.: 03-22745910)

Dear Sir

Federation of Automobile Workshop Owners Association of Malaysia (FAWOAM)

We refer to Members Circular No. 109 of 2011 dated 24th June 2011 on the above matter.

1)We append below our reply to FAWOAMs counter proposals:-

Please tick () appropriate box

AgreeDisagree

i) Trade Discounts

Views and Comments :

ii) Labour Rates AgreeDisagree

Views and Comments :

______________________________________________

2)We support the Claims Management Subcommittee recommendations on Parts Trade Discount and Labour Rates

Trade Discounts: Please tick () appropriate box

Yes

No

Views and Comments:

Page 2

Labour Rates

Please tick () appropriate box

Yes

No

Views and Comments:

Yours faithfully,

Name & Signature of CEO/Authorised Signatory

Name of Company

Date

(To be returned to the PIAM Secretariat by Monday, 4th July 2011)

JainurahFile AttachmentREPLY FORM - 24.6.11.doc