Thursday, March 19, 2009

Motor insurance premiums

Many motorists will have to pay higher insurance premiums this year. What can be done about it?

Read my articles:
Puncturing motor insurance claims.
New Motor Insurance measures - will it work?

If you are not happy with the increase in premiums, you should lodge a protest with your member of parliament or with the consumer association of Singapore.
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1 comment:

Unknown said...

Mr Tan, actually I had been following up this motor insurance premium increase for the past week, and after reading some articles (including your inputs), I discovered some unusual stuff which I hope you can clarify.

Firstly, motor insurance is not monopolized or dominated by 1 or 2 companies, but rather by many companies. So pricing power by each company is weak, once you increase the price, the customers will go. So is there a tacit understanding among these insurance companies to increase their prices altogether? Since the drivers must purchase the insurance, they have no choice.

Second, companies that intend to be sustainable must keep a lid on costs. For these companies, the biggest costs is claims expenses. Is it true that they need not be as vigilant in cost control as other type of companies because they can pass on these costs increases by jacking up their prices (as long as they do it all together -- see earlier pt)?

Insurance companies used the premiums collected to invest and we all know how bad the investment returns were in 2008. Could the fall in investment returns (or even losses) be the key reason for these companies losing money on this insurance portfolio and claiming it from drivers?

March 19, 2009 11:25 PM

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