Motor premiums set to rise

SINGAPORE - Bad news ahead for motorists.

After two years of sliding premiums, they may soon have to start forking out more for car insurance as insurers feel the impact of higher costs and lower earnings from intense competition which forced rates down.

An agency owner said: "The trend is clear. Premiums for car insurance are starting to bottom out as more motor insurers face losses."

He said these insurers are finding it difficult to manage costs because of the sustained undercutting sparked by the industry's stellar results in 2014. That year, the motor business posted a record S$149.5 million in underwriting profit. This attracted some smaller insurers into the market, resulting in stiff competition.

Motorists were the biggest winners as motor premiums slid by up to 20 per cent last year.

All this could change very soon.

AXA, Singapore's second largest motor insurer, has raised its premium for a 32-year-old male working in a bank and owning a year-old Toyota Corolla Altis with zero no-claims discount. Coverage for him will now cost S$1,867, up 3.8 per cent from a year ago.

For AIG, the No. 3 motor insurer, it is now S$3,255, up about 3.86 per cent from its 2015 premium of S$3,135.

Using AIG's basic plan, AutoValue, and the same profile, the motor insurance premium is S$2,588 for 2015 and S$2,687 for 2016, an increase of 3.8 per cent.

Only market leader NTUC Income's premium remains unchanged at S$1,502. NTUC Income increased its market share of motor by 1.5 percentage points to 20.5 per cent in 2015.

Its gross written premiums rose 3.3 per cent to S$234.4 million, despite the total market size for motor falling 4.4 per cent to S$1.141 billion amid stronger competition and a smaller vehicle population.

Pui Phusangmook, NTUC Income's executive vice-president and general manager for general insurance and health, said the insurer's competitive premium has attracted new customers. "We recruited new intermediaries and worked closely with existing ones to grow the motor business," he said, adding that customer benefits such as Orange Force, its accident-response team on motorbikes, and its own one-stop claim service centre, have given Income an edge.

AXA's motor portfolio also grew in 2015, with market share up 0.8 percentage points to 17.3 per cent. Its gross written premiums rose 0.5 per cent to S$197.5 million.

An AXA Insurance Singapore spokesman attributed this growth to the ability "to reach out to growing consumers' needs" with competitively priced and customisable motor insurance products.

Only AIG reported a smaller market share of 15.8 per cent, down 0.3 percentage points.

Its gross written premiums were unavailable.

Manik Bucha, its head of auto, said the reduced market share was "mainly due to a fall in the private passenger vehicle population in Singapore, which forms the majority of our car insurance portfolio".

Singapore's total vehicle population at end-2015 was 957,246, down 1.5 per cent from 972,037 in end-2014.

Together though, the strength and reach of the Big 3 meant that they increased their combined motor market share by two percentage points to 53.6 per cent in 2015.

Amendent: In the above story, we reported that AIG's 2016 premiums rose 30.9 per cent from a year ago. AIG has clarified that based on the profile of a single 32-year-old male working in banking (management) with five years' driving experience, who owns a one-year-old Altis and has zero No Claim Discount, the 2016 motor insurance premium for its AutoPlus plan is S$3,255. This is an increase of about 3.86 per cent from the 2015 premium of S$3,135.

Using AIG's basic plan, AutoValue, and the same profile, the motor insurance premium is S$2,588 for 2015 and S$2,687 for 2016, an increase of 3.8 per cent.

This article was first published on March 31, 2016.
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