The General Insurance Association, representing the insurance companies, have introduced a Motor Claim Framework in May 2008, with the aim of controlling the inflated claims. It did not work and has, in fact, resulted in more claims being submitted to the insurance companies. Here are the reasons.
1. In the past, insurers encourage private settlements if the damage was small, i.e estimated repair cost less than $1,000. This was so that motorist can continue to enjoy their NCD. Under MCF, all accidents have to be reported to the insurers and claims will as a matter of course, be made. We all know that when insurers are involved, the workshops jack up the repair cost. From a repair of a few hundred dollars, the price is now a few thousand dollars.
2. The assumption is that the appointed workshops help the insurers to control the repair cost. This is not true because they in fact are out to make a good profit from the insurers. They put up high estimates. And some of them bribe motor surveyors to overlook many items which may be overpriced or which repairs/replacements may not be necessary. The trick is to overblow their repair estimates for the appointed surveyor to go through the motion of cutting a few items. This give the appearance that the surveyor has done his job. The going rate, I understand is for workshops to pay $100 per case to surveyors to gloss through the repair estimates. That is why the tender system is still the best to get around this.
3. Workshop owners work with lawyers and educate motorists on their legal rights with respect to personal injury claims. In the past, small injuries or soft tissue injuries may be overlooked. Now workshops refer them to lawyers to claim. I know of a person who was involved in an accident two years ago when a taxi collided into the rear of his car. He and his wife suffered slight pain in the neck. The workshop owner told them to claim for the injury and referred them to a lawyer to assist. That is why personal injury claims (especially for soft tissue injuries) have increased in recent years. I think most of these claims are genuine. In the past, they did not surface because people did not think of seeing a doctor and claiming if the injury was not serious.
(Mr. Freddy Neo was previously the general manager for general insurance in NTUC Income. )
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