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 (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.

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.

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%.

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

What You Need To Know When Buying Motor Insurance For First Time

There are many things that you should know when you are buying motor insurance for the first time. The premium you pay depends on several factors like your driving experience, gender, marital status, age, claims experience, make and model, type of coverage, age of vehicle, and many more things.

Type of vehicle

The first thing that you should know about motor insurance is your rate can depend on the type of vehicle that you want to have insured. Assuming all things equal, a Subaru Impreza WRX STI 2.5 will command a higher premium than a Toyota Camry 2.4. Generally, sports car or high performance vehicle will command a much higher rate. Other vehicles that are higher to insure include vehicles that are on the top ten most stolen list. Few years back, there was a high theft frequency of Singapore registered Toyota Harriers in Johor Bahru. Therefore, do not be alarmed if the rates fror such model is relatively higher. If you have not purchased your vehicle yet and you want to be sure to have the lowest insurance payment possible, then you should check this list.

Brand new vehicles are expensive to insure also. This is partly due to the higher repair cost possibly incurred as vehicle less than 3 years old are allowed to go back to dealer workshop for repairs with original parts used.

Type of plan

If you buy the car cash out then you can get the minimum coverage to be sure that your rate is cheaper but the more expensive the car is, the more the insurance rate will be. Also, if you purchase a brand new vehicle with a loan from a bank then the bank will insist that you get full coverage on the vehicle. This will be substantially more expensive for you also.

Age of insured &/or drivers

When you are looking for cheap auto insurance for first time drivers it is also important to compare all rates that you can. This means shop around and gets quotes from different insurance companies and sees who can get you the cheapest rate. Age makes a difference when you are looking for auto insurance also and if the first time driver is a teenager, then you should expect to have a high rate. The rates tend to drop with age after the age of 24 and after a proven track record of good driving.

Driving history

If you have endorsed or revoked driving license, you should expect your insurance rates to go up. E.g. drink driving. If you are in a car accident and you have to make a claim, you can also expect your rates to go up. It doesn't matter if the accident was your fault or not, it is because you made a claim. Some insurance companies will set up a claim reserve in anticipation of a potential Third Party claim against your policy. As such, you should expect a drop in your No Claim Discount on renewal.

Conclusion

If you are looking for cheap car insurance, it is crucial that you understand the terms and conditions imposed accordingly. There could be a higher deductible in exchange of a lower premium. Be sure that you agree with all of the terms.
Weigh your options and seek opinions from friends if needed. Be sure to shop around from different insurance companies to find the best rate and best plan for you.

The Name Is The Game For Car Insurance

Just stumbled across this article, find it quite amusingly interesting. Hope you enjoy reading it.
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It seems that there's more to a name than you might expect.

Car insurance provider insure has compiled a list of the names that are most likely to make a car insurance claim during the course of the year.

Apparently, men called Gabriel aren't so angelic as they top the list at 40 per cent while guys named Kyle, Jay, Muhammad and Aaron should also take extra care on the roads as they too make the 'top five' list of male names most likely to make a claim.

For females, Natasha is often a crasher - 32 per cent of women drivers with that name make a car insurance claim. The likes of Harriet, Juliet, Natalie and Helen are also unlucky behind the wheel.

By contrast, if you're a male driver named Finlay or Archie you'll be relieved to hear that your driving record is comparatively good. Both names top the list of male drivers least likely to make a car insurance claim at just 13 per cent. For women, it's Jasmine and Eleanor who have the safest record on the road with just 13 and 14 per cent of female drivers with those names making claims.

Despite the significant variations, car insurers insist they do not take names into account when determining car insurance premiums.

A spokesman for the car insurance provider insure stated that while statistics do not lie, the reasons why certain names are involved in more accidents than others is more likely to be down to their personalities, age or the car they drive rather than something written in the stars.

So whatever your name may be, you'll still have to shop around to find a cheap car insurance deal. By building up a no-claims discount you could lower your car insurance premiums and give yourself a good name.

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