GOOD NEW???

[Karen]

Income expects to cut motor premiums next year

They may be lowered by 5% to 10% as motor business makes money; insurance bonus cut may also be partially restored

By Lorna Tan

 

 

AFTER more than three years of being mired in red ink, signs are emerging that the beleaguered motor insurance industry is turning around.

 

Leading motor insurer NTUC Income announced yesterday that its motor insurance business finally returned to the black for the first six months this year, which may lead to a reduction in motor premiums next year.

 

And there is more cheer for holders of other Income policies.

 

 

The insurance cooperative received good returns from investing its premiums and is likely to restore half the bonus cut implemented last year.

 

Income chief executive Tan Kin Lian did not say how much profits its motor business made, but attributed the gains to higher premium rates over the past two years, as well as success in cracking down on over-inflated repair claims.

 

To avoid such claims, Income policyholders have to send their vehicles for inspection at an independent damage assessment centre immediately after an accident.

 

Income is also encouraging motorists to make private settlements for small accidents, instead of making claims so as to maintain their no-claim discounts.

 

'If this trend continues, motor insurance policyholders can look forward to a possible reduction of 5 to 10 per cent in premium rates for 2004,' Mr Tan told a press briefing yesterday.

 

Over the last two years, motor claims at Income rose 30 to 40 per cent and as a result, premium rates were raised by 20 per cent.

 

But this did not put off policyholders.

 

Income's motor insurance premiums grew 29 per cent to $109 million for the first six months of this year.

 

Last year was a different story. The insurer of 40 per cent of all motor vehicles in Singapore suffered motor losses amounting to $10 million for the same period.

 

For the full year, the losses were an overwhelming $30 million.

 

Overall, the motor insurance industry's full-year losses rose 8 per cent to hit an all-time high of $124 million.

 

This year, however, Income's life insurance fund performed well too, thanks to a 'good recovery' in assets, particularly in shares.

 

For the first six months of this year, it turned in a hefty $338-million profit, reversing a loss of $108 million for the whole of last year.

 

Gains from sale of investments and write-back of provisions accounted for $192 million of the surplus in the life fund.

 

Currently, the fund stands at $10.7 billion.

 

Mr Tan believes that results for the whole of this year are 'likely to support a full restoration' of the bonus. But policyholders should not get their hopes up just yet.

 

Income has decided to take a 'longer-term view' and expects to announce a partial restoration, which it claims will lead to higher yields for the policyholder than if there were no restoration at all.

 

Based on the current bonus rate of $10 per $1,000 insured, a 20-year endowment policy purchased this year shows a projected yield of 2.5 per cent but this will improve to 3.5 per cent if the bonus is partially restored to $15.

 

However, if the bonus is fully restored to $20, the projected yield is 4 per cent.

 

Income expects to go ahead with the partial bonus restoration if the economy remains steady and there are 'no unpleasant surprises'.

 

Last year, Income policyholders suffered a severe bonus cut of up to 50 per cent.

 

It was the insurer's second cut in two years. The year before, it reduced bonuses by just over 20 per cent.

 

In the first half of this year, sales of single premium products, which are mainly investment-linked policies, tumbled 85 per cent to $104.3 million.

 

However, with the re-introduction of a single premium Growth Plan and with a more vibrant stock market, Income expects to garner single premium sales of $250 million for the rest of the year.

 

The Growth Plan, however, was withdrawn last October as its projected yield was not sustainable under the difficult market conditions.

 

Total life regular premiums grew 8 per cent to $390 million for the first six months of the year, while general insurance premiums expanded 21 per cent to $174.2 million.

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hi all....

 

he he..... don't know true or not...... my premiums has went way up north for don't know how many many years ago...........

 

anyone care to share their thoughts?

 

cheers

karen

[Hitman]

Hi Karen ...

 

The magic word is "They may be lowered by 5% to 10%"

 

As for my thoughts, I think it will never go down unless INCOME is desperate for business. Thats how they started. They offered premiums at cut throat prices that they got lots of business from owners who switched agencies.

 

Then the accident claims started flowing in and now we got IDAC

[Vit4wd]

I never trust NTUC. Its N.A.T.O., if you know what I mean.