TODAYonline

Motor premiums could rise 5 to 30%

Could health, workerscompensation premiums also increase?

Cheow Xin Yi

cheowxinyi@mediacorp.com.sg

FACED with higher fuel and Electronic Road Pricing costs, car-owners could soon have to fork out 5 to 30 per cent more on insurance premiums as well.

This is the possible increase that :General Insurance Association (GIA) president Derek Teo foresees, over the next six months. The hike would depend on driver profile and claims history, he told Today.

The GIA, which has 31 members, yesterday released its half-year results which showed total premium income up by a healthy 9.4 per cent from the same period last year.

But losses in motor insurance, which accounts for about a third of the market here, more than doubled to $88.9 million, with insurers paying out 93 cents for every premium dollar earned.

This is in spite of a new Motor Insurance Framework effected in June to reduce claims costs and exaggerated claim filings. Among other conditions, car-owners have to take their vehicle to an approved reporting centre within 24 hours of an accident.

:Mr Teo said it would take at least six months for the new system to lead to more stabilised premiums — which have risen by up to 20 per cent already this year.

He attributed the premium hike in coming months to the sudden influx of claims being made under the new framework which requires prompt reporting time.

“If there’s no framework, third-party claims would be reported six to nine months later, some of which is intentional so that the information is not fresh and the underwriter cannot investigate the cause,” he said.

Health insurance

Underwriting profit for health insurance took a 49-per-cent dive to $6.6 million — but Mr Teo did not think it was a worry for the sector, attributing the fall to, for instance, fees paid to agents.

:The 21-per-cent increase in premium income in the first six months was due mainly to more multinationals setting up shop here and buying health insurance in bulk for their employees, rather than an increase in policyholders’ premiums per se.

“Premiums should generally remain stable because of competition and you wouldn’t want to price yourself out of the market,” he said.

But Mr :Stanley Jeremiah, a council member and former president of the Singapore Insurance Institute, has a different view.

:He believes healthcare inflation, which was 6 per cent for the second half of last year, is likely to push up premiums by 7 to 8 per cent.

“The cost of going to the hospital is getting higher. Ultimately, insurers will need to maintain their profits, they will have to cover administration costs, inflation costs plus profit:,” he said.

Workers compensation

On the issue of workers injury compensation, at least one insurer, NTUC Income, is warning of higher rates as well. The sector bled $5.6 million in the first half.

Mr Pui Phusangmook, general manager in Income’s general insurance division, said the results “reflect the higher claims incurred in this category, which in turn is attributable to the increase in Work Injury Compensation benefits in April and the removal of hospital subsidy for foreigners in January”.:

:But Mr Teo said any premium hike would have already been made by insurers during that period and should now stabilise.

“Workers compensation is unlike motor insurance — it is sold to corporations and underwriters are sensitive to the fact that there is other business that comes along with it, such as fire safety, and business loyalty matters such that you can’t increase premiums as you wish.”

Even as insurers and consumers grapple with the dynamics of demand and supply amid increasing costs, Mr Jeremiah pointed out that there are other ways for insurers to increase their revenue base.

“Singaporeans are grossly underinsured in home content — furniture and valuables. It’s something insurers can tap on,” he said.