SINGAPORE: The motor insurance industry saw its first underwriting loss in seven years in 2017, as an increase in private-hire cars and the use of personal mobility devices such as electronic scooters took its toll on accident rates.
As a result of this, individual insurers are likely to conduct a review of the commercial viability of their motor insurance business, the General Insurance Association of Singapore (GIA) said on Wednesday (Mar 14).
The motor insurance segment - which accounts for nearly one-third of the general insurance market - registered an underwriting loss of S$27.2 million last year, GIA said.
This came as the number of motor accidents rose to its highest level since 2008, leading to a 12 per cent increase - or S$60 million - in incurred claims over 2016, GIA said.
This is in spite of data from the Land Transport Authority (LTA) showing that Singapore's vehicle population has remained stable over the past five years.
Further exacerbating the problem faced by motor insurers is an increasingly competitive market, which dragged down gross premiums by 3.3 per cent to S$1.1 billion last year.
AdvertisementAdvertisementPHONE USAGE, INCREASE IN PRIVATE-HIRE CARS LIKELY CONTRIBUTORS
At a press briefing, GIA president AK Cher noted that the use of mobile phones while driving, the increase in private-hire cars as well as the increase of personal mobility devices such as electronic scooters likely contributed to the higher motor accident rate.
“The number of companies that have been profitable in this segment have deteriorated from one in three back in 2016 to one in five in 2017,” said Mr Cher, who is also chief executive officer and managing director at Tokio Marine Insurance Group.
GIA said it would continue to work closely with LTA and the traffic police towards improving road safety awareness for road users such as those driving private-hire cars.
“LTA rolled out new regulations and measures in 2017,” added Mr Ho, referring to that for private-hire services such as Grab and Uber.
“It’s early days, but the current stance is to conduct the enforcement through the booking service operators.”
FLAT GROWTH IN GENERAL INSURANCE SECTOR
Meanwhile, the general insurance sector saw tepid growth in 2017, with total gross premiums rising 0.8 per cent to S$3.68 billion.
Apart from motor insurance, companies were also squeezed in the health insurance segment, which posted a loss of S$28 million, continuing the downward trend seen in 2016.
"In the wake of medical inflation, rising healthcare costs (are) expected to remain key factors influencing this segment," said GIA.
“It is quite clear that the medical inflation in Singapore in recent years has outpaced the general inflation level, and that continues to be the case,” said GIA chief executive Ho Kai Weng. “The situation has to be addressed by putting in measures to control medical expense costs.”
GIA is taking steps to coordinate efforts with the Life Insurance Association to address medical expense inflation.
Meanwhile, gross premiums for work injury compensation also saw a decrease, falling 4.1 per cent to S$337.9 million due to a weaker construction sector demand and competitive insurance market conditions.
However the segment saw an upswing in underwriting performance, improving by 24.1 per cent to S$30.7 million, reflecting the improved workplace injury and fatality rates in 2017.
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