The General Insurance Association (GIA) of Singapore has raised red flags in the motor insurance segment as underwriting losses in this class of business reached about S$12.6m ($9.2m) in 1H2018, compared to a gain of S$17.2m in the corresponding period last year.
Claims costs increased significantly, amounting to S$291.3m for the first half of this year, an 11.8% increase over the corresponding period last year. This is also the third consecutive quarter this class of business has incurred a loss, which accounts for more than a quarter of the sector’s total revenue.
However, the number of reported motor accidents fell by 4.3%, GIA says in a statement. Gross premiums for the motor insurance segment fell by 2.4% to S$600.9 million in the first half of the year.
Overall, the general insurance sector recorded flat growth of S$2.07bn, with a marginal 1.1% increase in total gross premiums. 1H2018 underwriting profits for the general insurance sector as a whole declined 94.5% to S$3.14m.
Mitigating claims costs inflation in the motor insurance segment, the sector is constantly tracking and enhancing the Motor Claims Framework (MCF) and Fraud Management System (FMS), and working closely with key stakeholders to seek public awareness and education efforts on the need for road safety.
To ensure the continued effectiveness and accessibility of insurance products, the general insurance sector is also pursuing greater collaboration with other stakeholders, focusing on areas such as improving efficiencies through digitalisation.
"Our top priorities include working with key stakeholders to reduce the severity and frequency of motor accidents, and leveraging digital technologies to continuously develop and enhance the GIA Fraud Management System, to lower and mitigate claims costs inflation," said GIA president Karl Hamann.
The sector maintains a conservative outlook for the rest of the year as insurers work towards managing rising claims costs and underwriting losses across several segments. The sector also continues to be at the forefront of emerging trends including cybersecurity, with GIA's first Cyber Risk Forum which took place in mid-September, discussing the need for greater cyber resilience and awareness within the insurance community.