Forever their fingers are pointing at all others except themselves. GIA always announce underwriting loss! To layman, they’ll be taken by it and believes that they are really suffering from losses.

We know that Insurance are a collection of a monies from a group of people and dispense it when a condition is met. But insurance companies don’t just collect the monies and put them under their pillow. They invest these monies and get returns. These returns should be put back into the pool for dispensing.

However, underwriting loss means premium collected minus total payout. The investment return is not in the equation. Thet were newspaper reports that if you include these returns, they actually make Millions!

Also they are never transparent by providing the breakdown of their payout. How much are being paid to:

1. Motor repairs
a. Own Damagw Claim
i. Agents workshops
ii. Insurance Authorize Workshop
iii. Independent Workshops

b. Third Party Claim
i. Agents workshops
ii. Insurance Authorize Workshop
iii. Independent Workshops

c. Payment for car rental fee, survey fee, etc

2. Legal fee
a. Representing insurance companies
b. Representing car owners

3. Medical fee

4. Injury Compensation

5. Agents commission

6. Insurance companies’ operating cost
a. Office rental and other fixed overheads
b. Management and executives remuneration
c. Other staff remuneration
d. Other incursions

I won’t be surprise that the major components of the payout are:
1. Insurance Operating cost
2. Injury compensation
3. Agents commission (major because of the small part they play as compared to the reward)

You will be surprise that the ‘traditional’ culprit – the independent workshops’ repair cost is way down the list.

As stated by above contributor, average age of the cars are under 3 years and thus most will go the agents’ workshops.

Half the accident involved guilty party and thus need to claim OD and thus have to go the Insurance Authorised Workshops.

As all the cases have to lodge their reports at the Authorised Workshops, most of the Third Party cases will be handled by them too.

With the above factors, the leftover are actually very minute. This is the real contribution by the independent workshops.

So if you include the investment returns, reduces the operating cost and commission and manage the injury compensation well, I think we should be able tom reduce the premium significantly. Who knows maybe by as much as 50%!

Personally, I would agree with Mr. Tan Kin Lian’s posting 4 months back.

“The insurance companies are quite happy to let the claims continue to escalate. as they can increase the premium rates to match the higher cost. Increased premium means more money for the broker, repairer and profit. for the insurance companies”.

If that is the case, who should step in? It can’t be GIA, for most of them works for insurers. For the sake of Singapore motorist, I urged government agencies like LTA could step in and regulate the whole motor insurance industry.

2007-2008 = S$952
Renewal quoted = S$1833.57

Day light robing…

http://tankinlian.blogspot.com/2008/11/assessment-of-liability.html

In many cases, the lawyer gets involved in filing a claim by one party. The other party is obliged to engage a lawyer. The total claim cost is jacked up by lawyers’ fees and other administrative expenses.

We need a better system to handle the assessment of liability. Some countries adopted the “no fault” system to avoid this type of unproductive work.

Our regulator prefer to stand by the sideline. Hence, the escalating cost cannot be arrested. We need a more proactive regulator.

In 2003, the insurance companies lost a lot of money on motor insurance. They jacked up the premuim by 20 percent.

I headed a task force which recommended the setting up of independent assessment centers (idac). All insurance companies agreed to impose a policy condition that the motorists must report accidents and have the damages surveyed in idac, before they are sent to the workshop.

This would have prevented the aggravation of damages and inflated repair cost.

One large foreign insurance company decided to withdraw from the scheme. They were probably pressured by the dealers of new cars. Another two insurance companies that wanted to tap the market for new cars also dropped out.

The regulator (MAS) could have been pro-active in encouraging them to stay with the scheme, but they decided to keep their “hands-off”.

The remaining insurance companies continued with the idac scheme. It helped to contain the inflated repair costs.

Later, other insurance companies dropped out of the idac scheme, as they were not able to reduce their repair cost. As time goes on, the workshops were able to get back to inflating the repair costs. It becomes a “market practice”.

If the regulator is interested to reduce the premium for motorists, they have the power to do something constructive. They can require the motorists to send their vehicles for inspection at an idac center before sending to the workshop.

If the government is able to pass laws that requires employers to buy insurance for their maids, or to collect ERP charges at various places and various hours, why can’t they pass a regulation to require the vehicles to be inspected at idac centers?

If you do not like to pay higher premium, here is what you can do. It is taken from the conclusing paragraphs of my articles.

What can motorist do?

I still insisted that traffic police and LTA should somehow make more sense and put in more efforts in traffic regulating. Have you guys actually noticed that nowsaday big vehicles drive like F1. Like I mentioned in my previous, taxi should be regulated on where they can and cannot pickup pessengers!

The reason why idac was not involved in my accident claim is because it was a very clear cut case and the driver admit he was wrong. Like I said, I felt really sorry for him. Finally, heavy penalty should also counter with greater rewards. Since they are going to charge higher for premium. I think it would be fair to increase the NCD discount too, for people who do not cause hazard to the road. Carrot and stick must strike a balance!

But can we do something about it?

I work in a related industry. The total repair/ claim would consist of the following components:

1. Repair cost for both your car as well as the other party (if you are at fault). Additionally, the average age of the car population in Singapore currently less than 3 years only. Therefore technically speaking we would be allowed to send our beloved car to the Authorised Distributor for repairs; and we would do so in order to maintain our 3 Years Warranty. Unfortunately AD repair cost do cost a ‘bomb’, and if it is your fault, you may have to bear the cost of repair for the other car which probably will also be sent to another AD for repair as well.

2. Loss of Use. Assume that it takes 3 days for the repair. How much for the rental of an equivalent car for this period?

3. Loss of earnings. Hit a taxi and you will probably have to pay for the loss of his earnings as well as the daily rental of the taxi.

4. Surveyor Fees.

5. Lawyer Fees. Somehow most insurance companies do not bother to respond to your claim if you initiate your own claim against them ….. until you get a lawyer to send in a letter.

6. Medical Fees. Unfortunately, most people like to go for full body checkup no matter how small the wiplash (if any). Even if they think they are ok, they will still go just in case. So how much is it for an X-Ray or a Scan?

7. Inflation.

Therefore, you may notice that there are so many components added to the final claim amount –> Obviously more than just the cost of spray-painting and panel beating.

Hope this helps.

Yes, just like any other price hikes here which were then passed on to the consumers.

perhap, there is a system to insist that the car owner take a before after photos and given a clear instructions on where the photos should be taken and how it should be taken depending on the location of the impact and send to their insurer. This would then compared to that of a surveyor. For driver who do that, some form of discount for the excess can be stipulated to encourage them. Heavier penalty to the surveyor or even jail term should be in place.

Actually, there is a simpler system. Already, 10 idac centers (independent damage asssessment centers) have been set up all around Singapore. It is easy for the Government to pass a regulation that the motorist must send the vehicle for inspection at the idac center before they are sent to the workshop.

But, the government does not want to pass this regulation. They prefer to leave this matter to be sorted out by the insurance companies. The insurance companies have no power to insist on this requirement. So, the motorist will continue to suffer the inflated claims.

In some countries, through regulation or market practice, the motorist must submit a cliam to the insurance company and agree on the claim, before it is sent to the workshop – even for third party claim. Lawyers are not involved. They do not suffer the inflated claims as much as in Singapore.

If we do not deal with the real problem, we will always have to suffer the consequences.

Fully agree. Singapore unlike places like Hong Kong which has a very strict control over where the taxi can stop to drop or pick up pessenger. Don’t believe try waving for a taxi at the wrong place when you visit Hong Kong next time.

I am always puzzle over why the police or LTA do not enforce on the taxi? One day, start to think maybe being one of the biggest state owned taxi rental company in Singapore Confort. The taxi drivers benifits from this relationship, because if they want to slack to comfort taxi, they have to do the same for the other to avoid the obvious.

I felt that problem with Singapore is that they have too many state holdings. Unlike private organisation that need to react fast to the rules and people’s complaints. State Holdings can easily bypass them which the private can’t.

Mind you. I still have not touch on price fixing! Which they can ignore the public with the given backing, but not the private or foreign investor. Just ask yourself, how many of those are state owned in Singapore?

Then I received lawyer’s letter from the other car ownner claiming several thousands dollars including changing car head lamps etc! I called my insurance company to alert them on the possible fraud. Few months later, I was kicked out by the insurance company and when I called to ask why, they told me it was the claim experience and confirmed to me that they have settled and paid the few thousands dollars claim!

What to do? So weak and take too much trouble to contest that it is better they just pay and recover from increased premium!

Anyway I recall commenting else where tat in the past, Inital Cost of Buying Car is High and Usage was Lower.

Now is Initial Cost Low but Usage Much Higher.

This results in pple who do not plan well buying car and suffering later.
At the same time, there’s a explosion in the Population of Cars on the road which results in Poor Traffic which in turn Links to Higher Cost of Usage (ERP, Parking, etc)

This Poor Traffic also results in delay in Public Transport as Bus get caught in Jams too. Thus Bus are slow due to the Amount of Cars on the Road and not due to the Poor Service. But Amount of Cars on the Road was due to Lowering the Cost of Buying Car. =X

Additionally, due to Bus Delay, pple convert to taking MRT which also results in Higher Number of Humans per Sq Meter in Trains. =X

So, everything is actually link. So sad…

I wonder if anyone wrote any article regarding Cars, Prices of Cars, Comparison of Past and Present.