SINGAPORE: Motorists in Singapore are set to pay higher insurance premiums soon, with insurers suffering record losses in 2008.
Numbers from the General Insurance Association showed that the motor sector booked record losses of S$214 million last year. That brought down overall underwriting profits for the insurance industry by more than half to just S$50.8 million.
The association said inflated claims blew up record losses for motor insurers.
Insurers paid out S$742 million in claims in 2008 compared to S$582 million in 2007 as there was an increase in younger drivers getting into accidents with personal injuries.
But the association added that losses went down by about 10 per cent in the last two quarters of 2008 after it implemented the Motor Claims Framework in June to help reduce disputed claims.
Pui Phusangmook, Senior VP, General Insurance Division, NTUC Income, said: "We're trying to control the claims on our side. We try to settle directly with our customers or claimants without using lawyers. So by doing that, we'll save legal fees and that can be passed on as a savings as well."
Still, premiums are expected to rise. The average premium for motor insurance in 2008 was about S$1,000, a 15 per cent increase year-on-year and the highest average in the last five years.
Insurance companies said that amount is expected to go up by about 10 to 20 per cent in 2009 in light of the losses they incurred in 2008.
Overall, the industry's gross premium income rose by 16 per cent to S$2.88 billion.
Health insurance gained over 250 per cent in profits, while gross premiums for personal accident insurance went up by 11 per cent.
Mr Pui continued: "Last year, NTUC Income had a healthy growth of 15 per cent for this class of business (Personal Accident and Travel), and for this year, we want to expand our distribution channels. We want to work more with banks, credit card companies and affinity groups.
"Some of the travel products don't cover catastrophes. So we'll be revamping our products to cover certain benefits and increase some benefits as well."
Derek Teo, president, General Insurance Association, said: "The personal accident, travel and health insurance sectors have shown very prominent growth trends and are likely to continue into 2009.
"As for the commercial business, I think cargo is one class that could be severely impacted because of worldwide economic downtrend - less exports moving off from country to country."
Profits for cargo insurance went down by about 10 per cent in 2008. - CNA/vm