Question No. 85
Notice Paper No. 136 of 2009
For Oral Answer

Date: For the Sitting on 18 August 2009

Name and Constituency of Member of Parliament
Yeo Guat Kwang, Member for Aljunied GRC

Question

To ask the Senior Minister (a) whether the Monetary Authority of Singapore (MAS) is satisfied with the current motor insurance compensation scheme set out in the Motor Vehicles (Third-Party Risks and Compensation) Act; and (b) whether MAS will look into the feasibility of a no-fault motor insurance regime.

Mr Lim Hng Kiang, Minister for Trade and Industry and Deputy Chairman:

There is currently no statutory motor insurance compensation regime for motor accidents in Singapore.  Instead, the claim of a motorist against another arising from a motor accident is founded in the tort of negligence.  This means that a person who has suffered damage arising from the negligence of another may seek recourse from the negligent party for compensation. Any compensation paid out would be in proportion to the degree of negligence committed. 

2. The Motor Vehicles (Third-Party Risks and Compensation) Act does not set out a compensation regime for motor accidents.  However, it requires a motorist to purchase compulsory third-party insurance to cover his liability arising from the death or bodily injury of others caused by his use of a motor vehicle.  While additional coverage beyond third-party bodily injury liability is not a legal requirement, most motorists choose to purchase comprehensive insurance policies that also cover the cost of repairing damage caused to third-parties’ property as well as their own vehicles.  Otherwise, they would have to pay for these costs out of their own pockets.

3. The recent increase in motor insurance premiums has featured prominently in the media of late.  The insurance industry has explained that this was necessary following record losses incurred by insurers, as gross claims settled increased by 36% from 2007 to 2008.  Several reasons have been cited for this increase in claims.  Some have cited inflated third-party claims, and suggested that a no-fault regime might reduce this. 
 
4. There are several factors that have contributed to the increase in motor claims costs.  MAS is working with relevant government agencies and stakeholders to study the issue carefully, and to consider the various proposals that have been raised, including the feasibility of introducing a no-fault regime.  The experiences in countries that have introduced the no-fault regime are that there are pros and cons which require further evaluation.

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