Singapore Sees Red Flags In Motor Insurance

Singapore Sees Red Flags In Motor Insurance

The General Insurance Association of Singapore raised red flags in the motor insurance segment as claims costs rose significantly. The sector's overall profitability also plunged.

The General Insurance Association (GIA) of Singapore said on Tuesday claims costs for the motor insurance segment increased significantly, as it reported half year results ended June 2018 for the first time. The segment's costs amounted to S$291.3 million, and accounts for more than a quarter of the sector’s total revenue. 

The GIA reported gross premiums and underwriting profits in five main segments - Fire, Motor, Work Injury Compensation (WIC), Personal Accident, and Health. 

«Our top priorities include working with key stakeholders to reduce the severity and frequency of motor accidents, and leveraging digital technologies to continuously develop and enhance the GIA Fraud Management System (FMS), to lower and mitigate claims costs inflation,» said GIA President Karl Hamann.

Lower Accidents, Higher Claims 

Overall, the number of reported motor accidents dipped by 4.3 percent from a year ago. However, this was overshadowed by the significantly higher increase of 11.8 percent in incurred claims which totalled S$291.3 million.

Overall, the general insurance sector recorded flat growth of S$2.07 billion, with a marginal 1.1 percent increase in total gross premiums.

Mitigating Efforts

In order to manage costs inflation in the motor insurance segment, the sector is tracking and enhancing the Motor Claims Framework (MCF) and Fraud Management System (FMS). It is also stepping up efforts to increase public awareness and education efforts on the need for road safety.

To ensure the continued effectiveness and accessibility of insurance products, the sector is also pursuing greater collaboration with other stakeholders, focusing on areas such as improving efficiencies through digitalisation.

Profits Plunged

Gross Premiums for the industry recorded flat growth for first half of 2018, with a marginal increase of 1.1 percent in total gross premiums, amounting to S$2.07 billion. Gross Premiums for Personal Accident and Health insurance segments rose by 0.3 percent and 11 percent respectively, but fell for the other three categories. 

However, underwriting profits for 1H2018 plunged 94.5 percent to S$3.14 million, as claims costs increased significantly across key segments such as Motor insurance (174 percent lower from a year ago) and WIC insurance (539 percent lower from a year ago).