Claims last year outpaced premiums collected by 20%
GIA task force to tackle rise in motor insurance claims

[SINGAPORE] Faced with claims that now exceed premiums, the General Insurance Association (GIA) of Singapore is reviewing the practices and policies in the local motor insurance industry.

NTUC Income's chief executive officer, Tan Kin Lian, who will head an 8-member task force, disclosed yesterday that total motor insurance claims last year was 20 per cent more than premiums collected.

"The challenge is to manage claims so that premiums don't have to increase. If claims are well managed, there is a possibility of reducing claims by between 10 and 20 per cent," he said.

Motor insurance premiums totalled some $500 million last year - about a third of total general insurance premiums of some $1.5 billion. On the other hand, insurance industry data reveals that 25,582 claims were made last year totalling $376 million, but industry sources say this does not including payouts for previous year's claims, management and marketing costs, and commissions for intermediaries. Among the causes of rising claims and expenses are fraudulent practices by some motor workshops and a rise in litigation cases.

GIA president Seow Nee Shek, who presented the task force members yesterday, said the team would look into setting up a network of independent assessment centres around the island. They will also push for greater use of the Third Party Motor Claims Tribunal which was set up on Oct 1 to arbitrate in disputes between insurance companies and claimants. The tribunal is headed by Edmund Lim of Royal & Sun Alliance Insurance, who is also on the GIA task force.

Move to tackle rise in motor insurance claims

Consumers' interest on the task force will be represented by Gerard Ee, president of the Automobile Association of Singapore and Nominated Member of Parliament.

Other task force members include GIA vice president David Tan, GIA committee member Wee Jim Hock, Claude Marx of AXA Insurance, Michael De Giorgio of American Home Assurance Co and R Athappan of India Insurance.

The Monetary Authority of Singapore will have observers on the task force.

Another issue to be discussed is whether insurance premiums should cover the price of Certificates of Entitlement to own vehicles - the subject of recent debate in the letters pages of the print media here. For the first time in six years, the industry had to explain itself publicly.

Among other things, motorists wanted to know why their vehicles cannot be insured without COE and other taxes - components that make up three times the actual value of a car.

NTUC Income's Mr Tan said: "Consumers are asking if they are paying fair premiums. My task is to see whether it is possible to lower the cost of insurance."

The team will also study whether premium charges could be tied to individual risk profiles. It will consider adopting international best practices, including sales and service standards for the industry, procedures for appraisal and claims management, and consumer education.

The task force will present its preliminary report by end-December. The final report will be ready by the second quarter of next year and its recommendations could be implemented by the end of 2001.