High levels of fraudulent car insurance claims proving challenge for insurers

The motor insurance industry has seen steady losses over the last few years and this is an area that general insurers face challenges in, said industry players interviewed by Singapore Business Review.

From an insurer’s perspective, ACE Insurance country president Mack Eng shared that one of the most challenging product lines is individual motor as claims ratios for this product is high due to various factors. “It is one of the products that continuously going through adjustments in pricing to ensure their continued viability for insurers,” he said.

AXA principal officer and chief executive officer (CEO) of AXA Insurance meanwhile warned that motor insurers “will have to be more cautious with the increasing number of cars, as third-party injury claims as well as fraudulent claims have been exponentially increasing in Asia, including Singapore.”

“Major motor players will have to focus on claims management and productivity to ensure profitability for this line of business,” he added.

AVIVA CEO Simon Newman echoed the same noting that “car insurers will have to focus on cost management to beat the trend of underwriting losses while ensuring premiums remain affordable.”

To address the challenge on cost management, AVIVA claims to be the first insurer in Singapore to offer car insurance solely online, direct to the customer. “With our online model, not only does it offer unprecedented convenience, it is a low-cost model that allows us to pass on cost savings to our customers,” said Mr. Newman.

In terms of claims management, AVIVA’s chief noted that car insurers will also have to review their processes to avoid fraudulent and inflated claims. “One way we are doing so at AVIVA is to encourage our customers to use our approved repairers by having a wide network of workshops so that it is convenient for our customers. We also guarantee approved repairs for 12 months,” Mr. Newman said.