Motor insurers in Singapore are expected to review the commercial viability of their business after booking a combined underwriting loss of S$27.2 million (US$20.8 mln) in 2017 compared to the previous year - the segment's first underwriting deficit since 2010.
The general insurance industry’s 2017 full year results announced by the General Insurance Association of Singapore (GIA) yesterday, revealed a 3.3% drop in gross motor premiums to S$1.1 billion while claims rose by 12% representing an increase of S$60 million.
“The industry will invariably have to look at the cost and revenue part of it and companies will have to make their own decisions, but there’s so many players in the market so I think it will take some time before we see the effect of this,” said GIA President, A K Cher, in response to the question of whether insurers will raise motor premiums.
Singapore’s average motor premium eased by 3.9% to S$1,155 in 2017, resulting from increased competition in the largely saturated motor insurance market.
Loss ratios in motor saw an 11 point jump to 64.9%, the highest recorded by the industry in the last five years.
Meanwhile, the number of reported accidents have been on the rise for the last two years with 167,549 cases reported in 2017, compared to 162,838 and 149,511 in 2016 and 2015 respectively.
While more detailed analysis is required, Mr Cher suspects the use of mobile phones on the roads and the increase in rental/private hire fleets could be the main contributors to an increase in road accidents over the past two years.
Motor remains the largest segment for general insurance in 2017 at over 30%, followed by health at 13.6%.
Rising healthcare cost
Health premiums amongst general insurers in Singapore - largely focused on group term policies - saw a marginal decline of 0.7% in 2017 to S$500 million. The segment posted an underwriting loss of $S28 million, continuing the downtrend seen in 2016 where losses stood at S$18.7 million.
The rapid pace of medical inflation remains the biggest factor influencing this segment and the GIA will closely align its efforts with that of the Life Insurance Association of Singapore to manage rising medical inflation in Singapore.
Reflective of the competitive market conditions in the general insurance sector, overall underwriting profit for the industry contracted to S$107 million, while gross premiums rose by 0.8% to S$3.68 billion.
And while the motor and health segments recorded declines, fire, personal accident, marine cargo and hull were among those that registered increases in gross premiums in 2017.
While the challenging market conditions are expected to persist this year, the general insurance industry intends to stay focused on the core areas of improving automation and embracing digital solutions to forge a stronger sector.
There may also be some prospect of consolidation in the sector where 36 general insurers currently operate, with participants acknowledging that it is overcrowded.