14 March 2009
I refer to the letters by Raganathan Vivek “Why should we pay for insurer’s laxity” and Sia Chong Yew “It’s high time motor insurers put their house in order”.
I agree with the views of these writers. Motor insurers should be more active in combating inflated claims instead of passing the higher cost to consumers through premium increases.
During the 30 years that I headed NTUC Income, my colleagues paid special attention to deal with the inflated claims. We were able to keep the premiums at a more affordable level. We considered it to be our duty to the consumers and be profitable at the same time.
I wish to point out that, apart from the motor insurers, the regulatory authority can play a part as well. Most inflated claims are made by third parties claiming for the repair cost, injury and medical expenses. These claims are lodged with the insurance company a long time after the accident, making it difficult for the claim adjustor to assess the actual and fair amounts of compensation.
To make matters worse, the claims are lodged through lawyers, which increased the total claim payments by an estimated 30%.
This matter can be resolved by a simpler regulatory change. Make it compulsory for a third party to lodge the third party claim with the insurance company within 24 hours of the accident. The insurance company should be given the opportunity to inspect the vehicle and settle the claim directly and promptly. The third party should engage a lawyer only in the event of a dispute on liability.
This practice is adopted in many countries, either as a regulator requirement or as a market practice. It is surprising that Singapore continues to have many third party claims settled in an inefficient and expensive manner through the legal system.
I hope that the relevant authority, i.e. the Monetary Authority of Singapore or the Land Transport Authority, will make the necessary change to the regulation to address this problem. This will reduce the inflated claims by several hundred millions of dollars and lower the cost of motor insurance to consumers.
Tan Kin Lian