Car insurers try new tack

A COMMON lament among motor insurers is that underwriting vehicle risk is by its perverse nature a losing proposition. Padded repair bills, damage fraud, theft, third-party claims and the growing trend of young drivers getting into nasty accidents contribute to high payouts.

Moreover, competition among the 30-odd motor insurers has held premiums down. The facts though do not support fully the assertion. Taking the past 5 years - a period when car ownership rose rapidly - as a guide, profits were recorded in 2004 and 2005. In 2006, a loss-incurring year for the industry overall, two of the three largest motor insurers - AIG and NTUC Income - were profitable, proving that motor underwriting is generally not meant for small outfits with limited portfolios and poor histories in settling claims promptly. Last year, however, insurers took a bath. They lost more than S$100 million. As a result premiums have gradually been edging up. The industry has not offered any studies to explain the dramatic spike in losses.

It is true insurers have struggled to come up with the best formula to make vehicle owners feel protected while keeping their underwriting viable. Almost all of the problem is traceble to the matter of what happens after an accident. Damage assessment and workshop fraud are long-standing weakness in the system. The General Insurance Association (GIA) is now proposing a one-stop approach that seeks to eliminate the bureaucratic hassle of reporting and making third-party claims, besides the trauma of organising workshop repairs. Car owners need only inform their insurer after an accident and all issues, down to towing and the use of a replacement vehicle, would be taken care of. This is what is being promised. If the approach can make life easier for motorists caught in stressful situations, while keeping costs down for insurers, by all means give it a go. Previous attempts to eliminate tow-truck racketeering and workshop tampering, resulting in inflated claims, did not have lasting benefits. Why it has been rare for offending workshop proprietors to be taken to court by insurers shows how entrenched the shady practice is.

Premiums are the next issue to consider. One-stop convenience may mean higher initial costs. But over time, the new deal must bring premiums down as fraudulent claims and consequential litigation are reduced. This is how the experiement should be evaluated. Anything less will mark as a failure. Attorney-General Chao Hick Tin reminded a fraud management conference last year that the true cost of insurance fraud was borne not by the insurers but their customers. Car owners have no reason to be smug just knowing they are "covered".
Source: http://www.straitstimes.com/Home.html

Is low premium really good?

If you run a search on google, you will find plenty of articles providing tips on how you can save on motor insurance premium.

But wait, is that really savings? For some instance, it may indeed be savings but only in the short run. In other instance, it could be a possiblity that the information provided are not consistent. This is very common when your agents do not have your complete information. You have to understand, at times, even a year more of driving experience explains for the difference.

If the infomation provided are accurate, then there could be more restrictions and conditions imposed on your policy. Why? It's very simple; Insurers are not charity organisations. If insurer A charges $500 premium and insurer B charges $1000 premium, it only makes sense for Insurer A to probably tighten the policy. To do that, they can increase the excess or restrict the profile of the drivers athorised to drive the vehicle under the policy.

For example, only people of age 26 and above with at least 1 year of driving experience is allowed to drive the vehicle. As such, if your children or friend fall under this catergory, they will be excluded from coverage.

I'll like to stress that most people buy a car as a convenient mode of transport and if the restriction infringed on this purpose, then it is not advisable to go for Insurer A. Even though you may enjoy some savings in the short run but it also mean that you will need to come out with higher excess in the event of an accident.

What You Need to Know About Excess (Underwriting) - Part 4

By now, you would have acquired a good basic understanding of excess. But, do you know that other than Eldery Young & Inexperienced Driver (EYIDR), you might also experience a higher excess loaded by the insurer? I have listed a few examples below for your reference.

1. Endorsed driving license

It could be due to speed driving, hit and run, drink driving etc. Well, if you have your driving license revoked / suspended recently, it will affect your insurance premium and excess. The insurer will usually look at the duration of revoke, when it was revoked, alochol level, frequency, accident details, occupation etc to underwrite your proposal. If they do take in your case, you should expect a certain loading on your premium and excess accordingly.

2. High claim experience

In Singapore, you are required to declare any claim experience you have registered in the last 3 years. Let's assume you had a bad chain collision accident recently and being the last car of the accident, the liability is down on you. The total claim experience came up to $50,000. What will happen to your renewal? Well, if the insurer takes in your case, you might experience a loading on your excess, not to mention premium as well. The level of increase is dependable on the claim experience, no claim disount level before the accident(s), frequency of accidents, loyalty with insurer etc.

3. Frequency of accident

You might not have high claim experience in the last 3 years (E.g.1 at fault claim of $50,000) but you could have encountered 2 or more at fault claim with claim experience of say $10,000 in total. In such case, the insurer may also increase your excess due to high frequency of accidents. You might question the rationale behind this when the claim experience is much lower than the previous example. The answer is very simple. Higher frequency of accident means more claims of own damage and from Third Parties. You might have a low claim experience of $10,000 today but that doesn't mean you will always have a low claim experience. The next accident could be a fatal accident which can cost the insurer hundred of thousands, especially since it involves bodily injury.

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What You Need to Know About Excess (Premium) - Part 3

Let us move on to see how excess is related to premium.

Let's assume that you have a normal saloon car (Toyota Vios) and based on your profile, your motor policy premium is at $1000 with standard excess of $500. As mentioned earlier, if you happen to have a minor accident with cost of repairs < $500, it is pointless to claim against your policy for the repairs. As such, insurer actually protect themselves from small claims by setting a standard excess on the policy.

Thus, the higher the standard excess, it also means a lower risk for the insurer. In that earlier example, if the standard excess is at $1500 instead of $500, the premium should be lower than $1000, say $950. Likewise, if the standard excess is set at $0, the premium will be higher than $1000 since it means a higher risk for the insurer to incur losses.

In practice, most insurer will alow the insured to buy up or buy down excess which is also commonly known as voluntary excess. However, there will be a limit on how much excess you can buy up and in Singapore context, it is usually set at $3000.

On the other hand, if you would like to buy down excess, there may be some conditions attached. For example, the insurer may only allow the insured to buy down excess provided there is no claim or 1 claim < $10,000. This is only an example and it differs among all insurers. There could be more criterias which are not listed here.

One important point to note is any additional excess imposed by the insurer is usually not allowed for buydown. So, if the standard excess is $500 but due to your driving experience, your insurer has increased the excess to $1500, you will not be able to buy down the excess at all.

7 Things to Know Before Filing Any Car Insurance Claim

The aim of motor insurances is to cover all car costs that happen from any undesirable events, which is an accident. You pay up the rates, nevertheless once your car is damaged, you are afraid of the higher insurance premiums because of the filed claim.

This is oftentimes related to the motor insurance policies, specially the exceptional conditions that are enclosed inside. Thus financial consequences commonly are applied in claiming it which could be surprising.

The followings are 7 things that you should acknowledge before you file any car insurance claims.

1. Car Insurance Policy Renewal

Normally, insurance firms publish policies which can be renewed frequently. Yet, the company can choose not to renew the policy when the existing term ends. The decision taken are affected by many factors, therefore there are no solid rules whether the policy is going to be renewed or not. Still, the general rule is that previous accidents and claims do affect this decision.

2. Payment for the claim

Mostly, the insurance companies want excess payments for the claims. This can be accomplished by a one-time-payment or pay it by installments. But, it is advisable not to file a claim and paying the cost by yourself if the claim is small.

3. Claim Penalty

No-claim throughout the year could lead to a bonus given by your insurance company, which is a discount of your motor insurance rates. This means that filing a claim might lose part or even all of the bonus. It is suggested to obtain in-depth information before buying any car insurance policy. You may ask the insurance company representative to get a better understanding of the policy. This includes the claim penalty, non renewal guidelines and the no-claim bonus.

4. Factors of Accident

The fact is that if accident happens because of your fault, then you might get your policy dropped, or at least, getting a higher increase rate as the penalty. But, minor accidents might get a 'forgiveness'. This depends on the claim numbers and the attributes of the person himself, such as the history of tickets and accidents as well as whether he is drunk driving or not.

5. Report on Accident

It is recommended to file a report to your car insurance company and police department whenever any accidents happen.

The reason for this is so that damages, injury and evidence can be assessed thoroughly as soon as possible.

Failure to do so might result in the the investigation delay and could even lead to unable to prove that you are not at fault.

6. Garage Cost

Most policies do not cover the cost of storing your car while it is waiting to be repaired. The garage cost alone can add up to a remarkable amount, especially when the claim is being assessed.

To prevent this, you can obtain an agreement with the insurer about who is going to pay the garage costs. Of course, having your own garage at home to keep your car.

7. Contact your agent

Last but not least, always ask your agent to get the best advice on what should be done and what should not. This is since the fact that each insurance company has different rules and features.

Article Source: http://EzineArticles.com/?expert=Ron_San

What You Need to Know About Excess (Advanced) - Part 2

I'm going to talk a little bit more on excess that you'd need to pay in the event of an accident first before we move on to see how it relates to your premium.

After all, a lot of us might not be aware of the possibly additional excess imposed by the insurer on the policy which is usually reflected somewhere clearly in the terms & conditions. I have listed down a few common ones for your reference.



1. Unnamed driver compulsory excess

Some insurers impose an additional excess in the event that the driver of the accident is not named under the policy. The rationale is very simple; if the driver is not named, the risk uncertainty is higher and the premium collected might not be sufficient in the first place.

2. Elderly, Young and Inexperienced Driver (EYIDR)

It is not uncommon for insurers to charge additional excess for drivers that fall under EYIDR category. The criteria of EYIDR differs among insurers but that's beside the point. The idea is insurers practice it and as insured, you have to refer to your terms & conditions in order to protect your interest. As a guide, the criteria might be anyone who is less than age 26, anyone who is more than age 65, and/or anyone who has less than 1 year of driving experience.

3. Third party excess

This is very rare and insurers seldom practise this. Third Party excess simply means that in the event of an accident, if there is any Third Party claim against your policy, you (as the insured) will need to pay the Third Party Excess. Of course, if you are claiming against your own damage, you will also need to pay your own damage excess. In the end, you will need to pay for 2 types of excess. Wow! So, why will insurer impose such a term? It is usually for abnormal or not preferred risk and in order to protect their own interests, the insurer might consider this option before they agree to underwrite the risk.

What You Need to Know About Excess (Basic) - Part 1

Are you a first time car owner? Do you know what you need to pay in the event of an accident?

If you are a first time proud owner of a car, you will probably have seen the certificate of insurance from your insurer already. You might not have noticed in the certificate or might not even be aware of this term that appeared as Excess. Some people like to call it "Deductible" instead. So, what is it?

I'll like to define it as the minimum amount that you have to pay before the insurer proceed to settle your claim. Another definition is also available at thefreedictionary.

Let me give an illustration. For example, right under your certificate, the standard excess is stated as $500.00. Thus, in the event that you met a minor accident and need to submit your damaged vehicle for repair and assuming that the cost of repairs is $2000.00, your insurer will only pay $1500.00 ($2000.00 - $500.00) for the cost of repairs. The balance of $500.00 is the amount you have to bear.

So, what if the cost of repairs is lesser than the excess stated in my certificate? In such cases, there is no incentive for you to pursue a claim with your insurer anymore. You may consider settling the claim on your own with your preferred workshop in order not to affect the No claim discount on your policy.

Thus, if you are getting a new car soon and checking out on the rates, you may also wish to take a closer look at the excess imposed. Do not be surprised if it differs among insurers since it is tied to the premium.

Last, but not the least, if you are interested to know more about excess and how it relates to your premium, keep a lookout for it as I will talk more on this soon!

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Car Accident Settlement - Get the Most Out of Process

Getting a fair car accident settlement can be difficult. Insurance companies are savvy, and their adjusters are trained to negotiate and settle with you for the lowest amount possible.

Insurance companies leverage the vehicle damages (and the total loss process) against you. For example, they will try to settle with you as soon as they talk to you. They will tell you that they will fix the car and "take care" of you if you settle for any/and all claims. They will offer you anywhere from $50 to $500. They will try to "cut of" the rental car as soon as they can so you are put in a weaker position and you settle faster. These techniques are unfair, but yet they are legal.

The problem with accepting an early settlement is that you can potentially lose all your negotiation leverage. A car accident settlement due to a bodily injury is substantially more powerful than a total loss settlement. A bodily injury claim will take into account subjective values (i.e. pain and suffering, loss of consortium, loss of business income, etc.) The total loss settlement will only include "objective values." The insurance company will find the value of other similar vehicles in your local market and determine what is the most the can offer you.

If you settle your injury claim, then you have no leverage. The insurance company will fix the car however they want to (i.e. they will fix your car with used parts). Having the power to argue that you were injured could make the adjuster be much more likely to settle with you for what you are owed. If you do not have an injury claim, trying to get your vehicle fixed or totaled can be a very difficult task.

Insurance adjusters know that you can leverage an injury to get a better treatment in the vehicle claim. They usually "split" adjusters so you deal with two different people. The liability adjuster (the person dealing with vehicle damages) will tell you that the injury does not have anything with your vehicle repairs and that you have to talk with Joe Smith for that, to please call 1-800... When you talk to Joe Smith, Joe Smith will tell you that the vehicle damages do not relate to the injury. They will play "musical chairs" with you so they do not have to give you a straight answer.

In theory, they are correct. The injury and the vehicle damages are two different things. However, you are indeed dealing with one car accident. Your inconvenience for having your vehicle hit, having to deal with adjusters, dealing with medical bills, doctors, etc. must be compensated somehow. Injury adjusters will try to tell you that they are only settling pain and suffering, and that a car accident settlement does not include "inconvenience". This is incorrect. You are the ultimate person that settles your claim. You are owed for all damages that the liable party caused.

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What you need to know about No claim discount (Underwriting) - Part 5

The NCD does not just help to reduce your premium. It also sends a strong message to the underwriter on your profile.

If you are enjoying 50% NCD on your motor policy, what you are telling your insurer is that you have been driving without any claim in the last 5 years or more. This is an amazing feat and i can assure you every underwriter generally likes insured of such profile.

True enough, the premium collected will be substantially lesser than someone of exact profile with 0% NCD but that's not the point. Insurance is after all about pooling of risk and if an insurer can underwrite more good risk profiles than otherwise, it also means possibly lower loss ratio which translates to higher profit margin! How about that after all?

Thus, a high NCD level will help to increase your chance of having your qoute approval. This is especially true for High Value or High Performance vehicle such as Ferrari make or Subaru WRX STI. As such vehicles are not your common saloon vehicle, but comes with hefty price tag and / or high horsepower and pick up spped, generally the underwriter will prefer insured who has a proven track record of safe driving. What is the indicator they will look for then?

SHhhhh..... No Claim Discount. . .

However, i'm not saying here that NCD is the only indicator or only underwriting consideration. Well, there are many more factors that an underwriter will have to consider and look out for such as loyalty, business consideration etc. But NCD remains a strong indicator as it's proven.

What you need to know about No claim discount (Declaration) - Part 4

You probably have not noticed before on the top most portion of your motor proposal form a statement that reads:

"Statement Pursuant to Section25(5) of Insurance Act, CAP.142 (Or any subsequent amendments thereof) You must disclose all facts as you know or ought to know which may affect the insurance cover being applied for. Otherwise, the insurance policy issued may not be valid"

I can't emphasise more on this especially to car owners who intend to change car. I have seen enough of car owners declaring haphazardly their NCD level only to get themselves into unnecessary troubles.

Look, if the insurer collects $1000 premium from you based on the declared NCD and found that the NCD should be lower or nil, it is only right and natural that they collect the difference from you. If they are unable to do so, they may shorten your policy to cover the difference.

It makes thing worse when you realised only after an accident that your policy has lapsed as the policy has been shortened. In fact, if you read that statement again, it is stated clearly that the insurance policy may not be valid!

Is it too strict or unreasonable of the insurer?

One has to realise that the insurer depends a lot on the insured's declaration on material facts in order to underwrite on the risk and to provide a fair premium. Without the actual facts, the insurer may not be collecting the required premium and right terms and conditions. Thus, it is the duty of the insured to declare all material facts that he knows or ought to know as this forms the basis of the contract between both parties.

This is Utmost Good Faith in its essence.


So, if you intend to change car, help yourself by checking with your existing insurer on your current NCD on policy before you pen it down on the proposal form next time. Do not leave it to chance!

What you need to know about No claim discount (Transfer) - Part 3

Accordingly to GIA guidelines, NCD can be transferred to another vehicle you owned but it is not transferable to another person. Nevertheless, over the years, insurers have developed their own practice and do allow certain types of transfer.

The most commons are transfer between spouses and transfer between parent & child. There is also possible transfer between companies, say transfer from Sole proprietor to company. All the transfers will require the relevant supporting documents to be presented prior to approval. I have listed a common list which might not apply to all scenarios.

1. NCD transfer form - There is usually a standard format provided by the insurer.
2. Marriage certificate
3. Birth certificate
4. Grant of letter of administration or probate - For cases whereby the insured has passed away.
5. Registry of companies certificate
6. Driving license

However, do take note that some insurer will tie the NCD to the transferee driving experience. Therefore, if a father wants to transfer 50% NCD to the son but the son has only 2 years + of driving experience, the insurer may allow transfer of 20% NCD only then. Also, some insurer will not allow transfer if there is any at fault claim on the transferee.

Well, every insurer has own internal criteria and you might want to check with your own insurer before any commitment to the policy.

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What you need to know about No claim discount (foreign) - Part 2

If you have been outstation and will be posted back, you may get your overseas insurer to provide you with a NCD letter so that you can present to your local insurer and enjoy NCD in Singapore. The NCD letter usually come with the insurer's letterhead and includes:


1. Your personal details
2. Last period of insurance
3. Number of claims free year or NCD level
4. Claim details, if any

Your insurer will recognise and award you with the NCD accordingly as long as the required details are completed and the last in-force date is not more than 1 year. E.g. Assuming today's date is 3rd March 08, the last policy expiring date should be after 3rd March 07. Some insurers may allow up to 2 years. For this, you will need to check with your respective insurer.

What you need to know about No claim discount (Basic) - Part 1

One way to reduce your annual premium is to earn your No Claim disount.

The No Claim Discount or NCD, as it's commonly known, is a discount provided by insurer as an incentive to the insured for being claims free. Thus, if you have been driving a motor vehicle and does not have any accident or claim against your policy on the last 1 year, your insurer will provide you with an additional 10% NCD on your renewal premium.

In Singapore, you may earn up to 50% NCD for private vehicle and 20% NCD for commercial vehicle and motorcycle. In some other countries, the NCD can go as high as 65% or even 70%.



If you are currently enjoying 50% NCD and has a at-fault claim against your policy, your NCD will reduce to 20% on renewal. Likewise, if you are enjoying 30% NCD and has a at-fault claim against your policy, your NCD will reduce to 0% on renewal.

Some insurers offer NCD protector to insured who are enjoying 50% NCD. The additional premium varies among the insurers but it is usually negligible, around 10% or minimum $50. The purpose of which is to safeguard your NCD at 50% in the event you have an at-fault claim in the policy year. However, if you have 2 at-fault claim in the policy year, the NCD will step down to 20%.

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Are women far better bets to cover in motor insurance than men?

Yes, it's a fact. The local leading insurers are also practicing this. Women do enjoy a lower rate in motor insurance premium than their counterpart. Normally, it should be close to 6% which can be quite a sweet saving.

Are women far better bets to cover in motor insurance than men? And why?


a. Ladies are naturally not inclined to drive very large or classic automobiles like men. Meanwhile, motor insurances are mostly related to the model, newness, driver's personality etc while they are being evaluated for insurance rate premiums and its insurable risks.

b. Ladies are not also inclined to drive recklessly or race abnormally along the highway, since their emotional reserve makes them very wary of accidents and harm. Therefore, the statistics of men involved in motor accidents are geometrically higher in proportions to that of women. Men drink and drive; drive late nights from parties and even rob with their own cars! These are delights to which generality of women take frightful exceptions, thereby making them good insurable prospects to insurers.

c. Ladies rarely institute lawsuits in the case of claims, simply because most cars they use are either bought by hubbies and to be replaced by them or bought by their parents. Meanwhile, men struggle to personally buy most of their cars and when it gets bashed, they race over to their insurers in the fear of avoiding a totally new purchase.

d. However, to encourage that women get more covers, some particular agents and insurers provide incentives to encourage them not only to be careful, but to equally cover their niche of the industry market.

http://EzineArticles.com/?expert=Omedo_I._Charles