Allianz Malaysia Bhd has called on the authorities to introduce stronger penalties and clearer regulations to curb motor insurance fraud, which continues to drain the industry of approximately RM1 billion annually. The company’s Chief Executive Officer, Sean Wang, stressed that current legal provisions addressing fraud and misconduct fall short when it comes to dealing with the tactics employed by unscrupulous tow truck operators and workshops.

Wang highlighted that while existing laws indirectly touch on fraudulent practices, they do not adequately address the scale and complexity of the issue. According to FMT, he estimated that around 10% of the industry’s RM10 billion total annual motor claims are lost to inflated or manipulated claims.

He pointed to a deeply entrenched network of touts, tow truck operators, and complicit workshops who have long operated by inflating repair costs. These claims are often exaggerated by 15% to 20%, resulting in substantial financial losses for insurers. Touts are known to patrol busy urban areas, especially on motorcycles, and race to accident scenes where they quickly offer towing services under the guise of being affiliated with insurance providers.

Once a vehicle is in their hands, these operators typically delay informing insurers and may hold onto vehicles for days or even weeks while negotiating with workshops willing to overcharge for repairs. In some cases, substandard parts are used or unnecessary work is performed to justify higher claim amounts. According to Wang, this practice has persisted for more than 40 years, misleading policyholders into believing their insurance provider is handling the repairs when in fact, the vehicle is in the custody of unverified agents.

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