[top: Mr Adif, in his car, is unhappy with his motor premium increase especially given that he has not had any claims. Seen here with his policy document showing the new price he has to pay this year.]

By Shree Ann Mathavan

NEVER mind if you haven't had an accident for more than two years - your motor insurance premium can, and will increase.

That's what Mr Adiff Jaffar, 31, a process operator for a bank, found out when he paid his insurance premium in January this year.

The premium for his current insurance policy with NTUC Income shot up by $400 from the $1,700 he paid last year.

That is an increase of about 24 per cent.

And it is after a no-claim bonus of 10 per cent.

Generally, motor insurers give policy holders these yearly discounts on their premiums as a reward for not making claims.

The increase came as a rude shock for Mr Adiff.

He said: 'I didn't think it was justifiable. I don't understand why premiums are going up when my car is getting older. Shouldn't it be getting cheaper?'

He called up his insurer, but was told that islandwide, all premiums are going up because of the overwhelming number of claims being made from road accidents.

16,000 claims

The General Insurance Association (GIA) announced on Thursday that the number of injury claims rose 86 per cent from 2007 to more than 16,000 last year.

GIA president Derek Teo attributed the jump to various factors including multiple injury claims, suspicious accidents and inflated claims.

The motor insurance industry paid out $742 million in claims last year, an increase of more than 27 per cent from 2007.

The industry had losses of $214 million, the largest it has ever recorded.

This is the main reason for the premium increases.

The latest figures showed that the average motor premium has jumped by 15 per cent since last year up to $1,013 because of the sudden jump in claims.

It was reported yesterday that NTUC Income will be increasing its motor insurance premiums by an average of 20 per cent this year.

Other players such as AXA and AIG have also said that they will increase their premiums, but have yet to disclose how much the increase will be.

Mr Adiff is still paying off an outstanding car loan of $55,000 on his Mazda 3 on top of the premium increase.

The father of two sons, 5 and 6, has an average total monthly household income of $4,500.

He said: 'I'm definitely feeling the pinch. I don't understand why it has to be such a large increase.

'A smaller increase of five to 10 per cent would have been more reasonable.'

It's a gripe shared by others, like a British expatriate who is working in the financial sector.

Another case

The man, in his 20s, who declined to be named, has seen a year-on-year increase of 24 per cent in the premium he pays for his Subaru WRX.

He said: 'I've been driving since January last year with no accidents, no tickets, no claims whatsoever.

'My understanding of typical business practice is that you increase premiums on those with claims, not your good customers.'

He intends to shop around for better rates.

One insurance agent, who has been running his own insurance business for 14 years, predicts that premiums will rise by 20 to 25 per cent for the year ahead.

The agent, 57, who declined to be named, said: 'If claims continue to rise, then of course, premiums may go up even further.

'But for now I think that is about as far as it will rise. As it is, already customers are complaining.'

'Still going up'

Mr Ken Loh, 42, who runs insurance agency M Plus Consultancy, said: 'This premium increase is the biggest increase I've seen in all my 11 years in the industry.

'The bad thing is, it's still going up.'

His prediction of how much premiums will rise in the coming year?

'Premiums could rise anywhere from 10 to 30 per cent. Given the current climate of negative claims, an increase of 5 to 10 per cent won't help the situation,' he said.

This article was first published in The New Paper.

Related links:
Why no cut in premium?
What is the Motor Claims Framework (MCF)?
Too early to assess MCF's impact
Car insurance premiums to rise?
How the industry fared last year