Motor insurance

Frequently Asked Questions - Premium Increase

1. I am a loyal customer insured with your company for so many years.  Why is my premium so high?
   
   We acknowledge that you are a loyal customer and have been with us for many years.  However, due to escalating claim costs, we have to increase our premium to keep our plans sustainable.  We value you as our policyholder and will accord you a 5% loyal discount.  This will put you in a better position than a new customer.
   
   Also, for our existing customers with no accident claims on their policy we have capped the increase in premium to approximately 15%.
   
   We expect that more than 90% of our policyholder (with no claims) will experience a milder increase in their renewal premiums. Some of them may even get to enjoy lower renewal premiums.

2. Why is your premium rates now higher than your competitors?
   
   Our premium rates, in general, are not higher than all our competitors.  We have tried our best to keep our premium rates as competitive as possible given the circumstances.  Depending on the experience of our motor portfolio, some makes and models may have a better claim experience than others and hence enjoy a more competitive premium.
   
   With the continuing underwriting losses faced by the industry as a whole, other insurers had been increasing their rates.  NTUC Income however, will ensure that despite the increase in premium, we will offer our customers an excellent level of service that will be our differentiating factor.
   
   Our primary objective is to run the business effectively so that we have at all times the ability to pay our policyholders' claims and thereby protect the interest of our customers.

3. As a cooperative, you should be regulating motor premium rates.  Why is that your rates are now not competitive?
   
   As a cooperative, our main objective is not to maximise profits.  We make all efforts to price our premiums correctly in line with the claims experience of our motor portfolio.  We have to run a viable business that will protect the interest of our customers.

4. Why can't Income manage their claims better instead of increasing premium?
   
   Managing motor claims is a challenging task.  Income has initiated many measures to bring down the average claim costs so that premiums can be kept low. However, we cannot do this alone and need motorists to help.  Motorists can insist on having their repairs done at workshops authorised by insurers. This should help bring down the claim cost.

5. Why can't the increase in premium be moderated in smaller quantums?
   
   We have taken into account the potential difficulties faced by our customer regarding the increase in premium. However the increase is inevitable. Hence we spread out our premium increases over the last couple of years.

6. Why am I paying a higher premium when the market value of my vehicle is depreciating?
   
   The premium for your motor insurance policy is calculated using certain risk factors such as vehicle model, capacity, driver's age among other factors.
   Market value of the vehicle is not a direct risk factor as it does not influence the claims received from third parties for property damage and injuries. 
   Further, the repair costs for motor vehicles has increased over the years.  Hence, there is a need to increase the premium to ensure a sustainable business.

7. Can you advise me of other options that could help me further reduce my insurance premium?
   
   You may consider the following options:
   
   

   1. pay a lower premium with additional excess;
   2. downgrade from a Premium plan to a Classic plan;
   3. choose to pay by instalments under the IPP scheme;
   4. insure your vehicle under Third Party or Third Party Fire & Theft cover.

8. The newspapers reported that there will only be a marginal increase this year. Why is my renewal premium increase more than I expected?
   
   The motor insurance industry as a whole has suffered another year of underwriting losses in 2009.  This is due to the adverse claim experience facing the motor industry due to  several factors such as inflation, more sophisticated vehicles on the road resulting in higher vehicle repair costs and consequently higher claim costs.
   
   However, we have capped the increase in premium to approximately 15%.  With this capping, your renewal premium may be on par or could be lower than our premium for new policy.

9. Why is that my renewal premium is higher even though I did not make any claim?
   
   Insurance is based on the concept of pooling of risks.  If the overall claims experience is bad, premiums will be increased across the board for all motorists irrespective of whether a claim is made or not.  However, the premium increase borne by those with a clean driving record will be lower than those with accident claims because the latter will have an additional loading on the claim and thereby pay even more.