Tan Kin Lian's Blog: Motor insurance and claims

Saturday, July 10, 2010

Motor insurance and claims

This letter is written by a financial adviser who faces difficulty in getting renewal for her client after two accidents.

My view
The current insurer refuses to renew the policy. The association representing the insurance companies asked her to try a list of over 27 insurance companies but all of them declined.

If a financial adviser finds this process to be difficult, you can imagine the trouble that will be faced by a consumer who has to get renewal on his or her own. The consumer may not be a bad driver. It may be just bad luck to have two accidents.

This is another example of the failure of the "free market" system. What can MAS do? In many states in America, there is the concept of the "residual market". If the consumer cannot get insurance, they can place the risk with a specified insurer (managing the residual market) who must accept the risk and share it with all the insurance companies. In some jurisdictions, the motor insurance market is run by the state, to overcome this difficulty.

Tan Kin Lian

8 comments:

Anonymous said...: On one hand, the law insists that insurance is subscribed.

On the other hand, the law does not compel insurance companies (or the market) to make it available.

It is a stupid situation which the market takes advantage of, and the law makers turn the other cheek.

This situation existed more than 70 years.. and at each review, law makers and industry players simply brush it aside. It says plenty about market leaders and esteemed parliamentarians, permanent secretaries, committees etc.

Send them for further training!; July 10, 2010 10:12 AM
Anonymous said...: I thought car insurance is compulsory? So if all insurance companies declined then what happens? Will the driver be fined for not subscribing to the law? What if the driver is an MP? Will there be diplomatic immunity?; July 10, 2010 11:55 AM
Anonymous said...: I think the residual insurance premium should have some loading depending on the amount of repair claimed. However, the premium can still be reduced in percentage should there be safe driving exhibited over a period of time.; July 10, 2010 1:22 PM
Anonymous said...: i was denied being insured by my ins co when i got 2 accidents. lucky for me ntuc took me and i am accident free for the next 3 years. i was just lucky.; July 10, 2010 2:51 PM
Anonymous said...: Difficult cases like this should be best handled by experienced insurance agents. Usually they are able to capitalise on the relationship and existing businesses with their principal and ask the insurer they represent to accomodate

Insurance companies are driven by profit, and the staff accepting the motor applications are salaried staff. If the driver consistently meet with accidents, perhaps the driver should give up driving for his/her safety and other motorists/pedestrains. The underwriters also need to justify the business he/she is writing. They need to protect their jobs

In the past under Mr Tan Kin Lian, NTUC Income philosophy is different, maybe NTUC Income can still accept the risk. The salarised staff know they are doing the right thing, and can also turn to their managers or even the CEO for endorsement/advice. Now, it is also profit driven. So don't expect much from them. I wonder where were those reporters who like to criticise NTUC Income motor insurance in the past, oddly they have been very silent

This is a free market. If the driver is lousy and the financial advisor cannot convince any insurance companies to issue the motor insurance policy, then the driver should perhaps stop driving. Use public transport instead. There is no need to blame insurance companies, they are accountable for their own profits and jobs; July 10, 2010 3:09 PM
Anonymous said...: I am sure he can get 3rd party insurance. That is the minimum.; July 10, 2010 6:20 PM
Anonymous said...: This is a lousy and careless driver. Two accidents within a month! Who would want to insure him/her?

The driver is better off with public transport and not be a hazard to other drivers, pedestrains and property.

I understand why insurers would not take him up. First, to save him/her premiums for the extra loading due to his/her driving history, second, it is better he/she not drive for the next 3 years as he/she is a dangerous road hazard.

I don't think the rest of the consumers should be made to pay extra premiums for the carelessness of lousy drivers who are driving premiums up due to their accidents claims.; July 11, 2010 12:58 PM
Anonymous said...: You have to get your agent to help. Sometimes the tied agent go back and see the people in the motor dept, "beg" for insurance, you will be able to finally get motor insurance. Premium is also expensive after 2 times accident. But what to do... no other insurance companies want ur business due to your carelessness.; July 15, 2010 9:39 AM