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Sharing economy and telematics to drive growth in auto insurance market
THE explosion of the sharing economy is projected to result in a 20 per cent rise in the number of rental vehicles on Singapore roads, in turn driving the growth of the motor insurance market here in 2017.
AIG Asia Pacific Insurance said on Wednesday other key contributing factors that would fuel the auto insurance market here are the increase in use of telematics, as well as an influx of younger drivers buying new cars.
Manik Bucha, AIG Singapore's head of auto insurance, said the arrival of international transport players such as Uber and Grab, and homegrown car-sharing enterprises including iCarsClub and Smove, are increasing the exposure for Singapore road users and impacting the way insurers underwrite risk.
"Not only are drivers who use rental cars for commercial enterprise more likely to clock up higher mileage and spend more time behind the wheel, but many are young drivers who are almost twice as likely to have an accident compared to the average driver."
Both factors are expected to result in a higher frequency of road accidents, Mr Bucha said, adding that advances in technology in the insurance industry also have the potential to reduce traffic accidents, such as through telematics.
AIG said its road safety survey in 2015 found that 68 per cent of Singapore drivers would consider installing a telematics device to pay lower car insurance premiums, while more than half of drivers believe telematics would change their driving habits for the better.
Said Mr Bucha: "We expect that the growing adoption of telematics devices by both insurers and drivers will reduce road risks and improve community safety, and eventually lead to a 10 per cent or greater decrease in auto insurance premiums over the next two years."