Key Supervisory and Regulatory Initiatives

ENHANCING REGULATORY FRAMEWORKS

Reviewing Motor Insurance

MAS recognises that intense competition in the motor insurance industry in recent years could lead to insurers adopting imprudent pricing strategies that could undermine their financial soundness. We have, therefore, encouraged insurers to strengthen their management of pricing risks. As a result, insurers have adopted risk factor premium rating models that enable them to set premium rates according to the risk profile of the insured.

The Motor Insurance Review Workgroup (MIRWG) was formed in 2003 to raise the professional standards of the motor insurance industry in Singapore. The workgroup comprises representatives from the industry and the Automobile Association of Singapore, with MAS participating as an observer.

MAS supported the implementation of MIRWG’s recommendations, which included the issuance of two consumer guides and a new Singapore Accident Statement (SAS) in November 2004. We also supported the General Insurance Association (GIA)’s recommendations for enhancing the Independent Damage Assessment Centres (IDACs), which assess and record accident damage to motor vehicles. By offering a greater scope of ancillary services such as repair estimates, IDACs may develop into one-stop service centres for insurers to process claims.

The recommendations are meant to reduce the likelihood of inflated and fraudulent claims, and to facilitate more efficient claims processing. This will ultimately benefit insurers and consumers alike through lower claims costs and less volatile prices.