Can BNM Stop My Insurer Cancelling My Policy?

If your car insurance company tells you it is cancelling your policy, you may wonder whether Bank Negara Malaysia (BNM) can stop it. BNM regulates insurance companies and oversees their conduct, but it does not automatically reverse every cancellation decision.

Your insurer must follow the terms of your policy and the rules that apply to it. If you believe the cancellation is unfair or was handled incorrectly, you can complain to the insurer and escalate the matter through the appropriate channels.

Can BNM stop an insurer from cancelling my policy?

Not automatically. BNM supervises insurance companies and sets requirements for how they deal with customers. However, it does not act as a general appeal body that can simply order an insurer to continue every policy.

An insurer may have the right to cancel a policy under its terms and conditions. However, it must follow the applicable cancellation process. If it fails to do so, or you believe it has treated you unfairly, you can raise a complaint.

BNM may review concerns about an insurer’s conduct through its complaint channels. However, this does not guarantee that your policy will be reinstated.

Why might an insurer cancel your car insurance?

The reason depends on your policy and the circumstances. For example, an insurer may raise concerns about:

• Incorrect or incomplete information: Details provided when applying for cover may be inaccurate or important information may have been left out.
• Non-disclosure or misrepresentation: Information relevant to the insurer’s decision to provide cover may not have been disclosed correctly.
• A breach of policy conditions: The insurer may believe that a policy condition has not been followed.
• Other reasons allowed under the policy: The insurer may rely on a cancellation condition stated in your policy wording.

Do not assume that every cancellation is valid just because the insurer has issued a notice. Ask for the specific reason and the policy clause it is relying on.

How much notice must an insurer give before cancelling a motor policy?

The notice period depends on the policy wording and the reason for the action.

For example, standard Malaysian private motor policy wording commonly allows an insurer to cancel cover by giving 14 days’ written notice to the policyholder’s last known address. The policy may also require the certificate of insurance to be returned within seven days after cancellation.

However, you should check your own policy. Do not assume that the same notice period applies to every type of insurance or every situation.

Also, distinguish between these situations:

Situation	What it means
Cancellation	The insurer ends the policy from a specified date, subject to the policy terms and applicable requirements.
Non-renewal	The insurer decides not to offer cover when the current policy expires.
Avoidance or voiding	The insurer argues that the policy should be treated as invalid, potentially because of issues such as material misrepresentation. This is different from ordinary cancellation.

If your insurer says your policy has been cancelled, ask whether it means cancellation, non-renewal or avoidance. The distinction can affect your rights and the period of cover.

What should I do if my insurer cancels my policy unfairly?

Take these steps before escalating the matter:

1. Ask for the reason in writing

Request a written explanation stating why the insurer is cancelling your policy, the effective date and the policy clause it is relying on.

2. Check your policy documents

Read the cancellation condition and any relevant terms. Compare them with the notice you received. Keep a copy of your policy schedule, certificate and all correspondence.

3. Submit a formal complaint to the insurer

Write to the insurer’s Complaints Unit, not just its sales representative or claims department. Explain why you disagree and attach supporting documents. Ask for a written response and final decision.

4. Escalate the complaint if it remains unresolved

If you are unhappy with the insurer’s response, you can consider the available redress channels:

• BNM: Contact BNMLINK if you have concerns about the insurer’s conduct or how it handled your complaint. BNM requires you to approach the financial service provider’s Complaints Unit first.
• FMOS: You may approach FMOS if your dispute falls within its jurisdiction. However, FMOS does not handle every type of insurance dispute, including certain commercial or underwriting decisions. Check its eligibility requirements before filing.

What happens to my cover after cancellation?

Your cover may end on the effective date stated in the cancellation notice, subject to the policy terms and applicable requirements. You should not assume that your car remains insured while you dispute the decision.

If you still own and drive the vehicle, arrange suitable replacement insurance before driving again. Malaysian law requires a motor vehicle used on the road to have the required insurance cover.

Ask your insurer whether you are entitled to a refund for the unused period. The amount, if any, depends on the policy terms, how long the cover has been active and whether a claim has been made.

Check your insurance options before your cover ends

If your insurer is cancelling your policy or will not renew it, check your options early. Compare available car insurance plans and make sure your replacement cover starts before you drive again.