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 The insurer will usually look at the duration of revoke, when it was revoked, alochol level, frequency, accident details, occupation etc to underwrite your proposal.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.