The profitability of the Singapore motor insurance market is expected to dip overall this year, after a strong result of SG$104.5 million in underwriting profits in 2020.
The decline in profits has been caused by the increasing frequency of road accidents and heightened losses caused by insurance fraud, a report by GlobalData said.
“In Singapore, the number of accident-related fatalities has increased by 11%, whereas injuries registered growth of 15% from January to September 2021, as compared to the same period in 2020,” said Swarup Kumar Sahoo, senior insurance analyst at GlobalData. “Subsequently, the Singapore motor insurance industry combined ratio, which decreased from 102.6% in 2019 to 87.9% in 2020 is expected to increase in 2021.”
The combined ratios of the top five motor insurers in Singapore worsened, with market leader NTUC Income registering 91.7% in 2020, down from 96.5% in 2019. In second place, AXA Singapore’s combined ratio in 2020 was 92%, down from 107.2% in 2019.
“In 2021, growth in vehicle sales, driven by economic recovery and growing demand for electric vehicles (EVs), is expected to help insurers in partially offsetting their underwriting losses,” Sahoo said. “EV sales in Singapore grew by 127% from January to November 2021.”
Technological adoption among Singapore motor insurers is increasing, with new tech-based products, such as short-term insurance and pay-as-you-go pricing systems, being launched.
Fraud is another area of focus for insurers. The General Insurance Association of Singapore estimated that around 20% of motor insurance claims are inflated or fraudulent. Insurers are looking to harness technology to improve fraud prevention and detection capabilities.
“Singapore motor insurers are embracing for a major shift in their product offering in the coming years with the government push for EV adoption to meet the objectives of the Singapore Green Plan 2030,” Sahoo said. “Increasing underwriting losses due to high accident rates and motor insurance frauds will continue to pose a challenge for insurers’ profitability over the next few years.”
