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Motor insurance sector suffers underwriting loss of S$12.6m for first half of 2018: GIA
MOTOR accidents are becoming more severe and involving more injuries, going by first-half results released by the General Insurance Association (GIA) on Tuesday.
The association said there had been a "significantly higher increase" of 11.8 per cent in incurred motor insurance claims, totalling S$291.3 million for the interim period, despite a dip of 4.3 per cent in the number of reported motor accidents.
As a result, the motor insurance sector incurred an underwriting loss of S$12.6 million for the six months up to June 30, from a profit of S$17.2 million in the same period last year.
The association noted that this was the third consecutive quarter in which motor insurance - which accounts for more than a quarter of the general insurance business - had been loss-making.
On the back of that, gross premiums for motor insurance shrank by 2.4 per cent to S$600.9 million in the first half of 2018.
There are no details on what contributed to the situation but the GIA said an inference could be made about the figures. It said escalating claims on the back of fewer accidents can mean only one thing: the accidents were on average more severe, possibly involving more injuries.
The Straits Times understands that more claimants engaging lawyers could be a secondary contributing factor, as claims through legal means are usually bigger. An increased number of inflated and fraudulent claims could also be a factor, sources said.
A bigger pool of private-hire cars - a fairly new phenomenon - could be another contributor.
Earlier this year, statistics from motor insurers showed that private-hire cars - which make up 4.9 per cent of the total vehicle population - accounted for 9.4 per cent of 82,800 accidents reported in the second half of 2017.
Passenger cars, which make up 59 per cent of vehicles, accounted for 49.5 per cent of accidents.
Taxis, which make up just 2.4 per cent, accounted for 13 per cent of accidents.
On the whole, the general insurance sector saw a marginal 1.1 per cent increase in total gross premiums to S$2.07 billion in the first half of 2018, the GIA said.
Underwriting profit plunged by 94.5 per cent to S$3.14 million, "as claims costs increased significantly across key segments such as motor insurance and work injury compensation insurance", it said.
Work injury compensation posted an underwriting loss of S$6 million - down from a profit of S$1.4 million in the first half of 2017.
GIA president Karl Hamann said: "Our top priorities include working with key stakeholders to reduce the severity and frequency of motor accidents, and leveraging digital technologies... to lower and mitigate claims costs inflation."
THE STRAITS TIMES