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Motor insurance premiums likely to continue to rise as claims and costs surge
SINGAPORE – Motor insurance premiums are expected to continue rising as insurers grapple with mounting losses and rising claims, said industry experts.
Latest industry statistics from the General Insurance Association (GIA) seen by The Straits Times show that in the first three months of 2025, gross written premiums for motor insurance rose by 9.4 per cent to $368.2 million, compared with the same period in 2024. Underwriting losses were up by about 14 per cent from $11.6 million to $13.3 million.
For the full year of 2024, underwriting losses widened significantly to $33.8 million, from $7.7 million in 2023 and $21.6 million in 2022. This marked a sharp reversal from the underwriting profits of $49.7 million in 2021 and $104.5 million in 2020. Meanwhile, gross written premiums rose 11.3 per cent to $1.21 billion in 2024.
Several factors are driving this trend.
Insurers grappling with more accident claims and rising repair costs in a competitive market is one reason, said Ms Judy Ng, partner of financial services consulting at KPMG in Singapore.
Global inflation, which has pushed up the cost of vehicle parts, and the growing presence of electric vehicles (EVs) which are more expensive to repair are also contributing to mounting expenses.
'Insurers have incurred higher costs of motor claims due to their efforts to fulfil a rising number and cost of motor accidents amid market competition,' said Ms Ng.
'An increase in the number of electric vehicles is another factor, as it can be costlier to repair EVs.'
Even leading insurers are not immune to the pressures.
GIA's industry rankings for the first quarter of 2025 showed that Income Insurance retained its top spot with a 25 per cent market share. Its gross written premiums rose by $6 million, but its underwriting profit nearly halved, dropping from $9.4 million in the first three months of 2024 to $4.5 million in the same period in 2025.
Liberty Insurance stood out for posting the largest improvement in underwriting results, bouncing back from a $567,000 loss in the first quarter of 2024 to a $2.1 million profit in 2025.
Allianz Insurance Singapore, on the other hand, saw the sharpest contraction in gross written premiums, falling 18.6 per cent from $26.4 million to $21.5 million.
Mr Timothy Jude Fu-Tien Wimala, chief executive of insurance broker Anika, noted that among the six major motor insurers which collectively hold about 65 per cent of the market, AIG and Liberty stood out for achieving strong organic growth from strategic increases of premiums for existing policies being renewed.
He said: 'AIG impresses with strong organic growth, leading to a gross written premium increase of more than 17 per cent, while keeping its market share flat. Essentially, AIG has found a way to increase its pricing while persuading its customers to stick around.
'Liberty, however, has beaten everyone in the Big Six by increasing its gross written premiums by more than 21 per cent and still keeping its customer base with market share essentially unchanged.'
The Big Six motor insurers in Singapore – ranked by gross written premiums, from highest to lowest for January to March 2025 – are Income, MS First Capital, AIG, India International Insurance, Allianz and Liberty.
Generally, insurers that failed to raise premiums lost ground, and even those with meaningful increases saw only marginal share gains.
'This illustrates how the costs of claims and operations are escalating premium growth and customers will carry the load of these increases,' said Mr Wimala.
'Unless insurers can better control claims and manage operating expenses, the only direction for motor premiums is up.'
On the consumer end, car owners are already feeling the pinch.
Car dealer Fed Wu said one of his customers, a luxury sedan driver with a clean claims record, experienced a 25 per cent hike in his insurance premium after four years with the same insurer – from $1,200 to $1,500. He eventually switched to another insurer, buying a new policy online for $1,101.
'With prices so high, many customers just pick the insurer that offers the lowest premium,' said Mr Wu.
While the current pricing pain may eventually ease, some volatility remains.
'Premiums could stabilise over time as insurers adjust to higher claims costs, and more accurately estimate and reflect these rising costs in their prices,' said Ms Ng of KPMG.
'However, some level of increase can still be anticipated in the future to cater for general claims inflation and other emerging factors.'
In the meantime, the message is clear: As long as claims stay high and repair costs keep climbing, insurers are likely to say they have little choice but to pass those costs on to consumers.
Source: The Straits Times © SPH Media Limited. Permission required for reproduction
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