RADICAL proposals are being considered by the consumer watchdog and motor insurance industry to clamp down on a scourge of insurers and motorists: inflated claims.
The Consumers Association of Singapore (Case) has suggested doing away with third-party claims, in favour of a "no-fault regime", which exists in one form or another in countries like New Zealand, Canada and the United States. In a no-fault system, motorists will make claims against their own insurer in an accident, whether they are at fault or not. This removes disputes and theoretically reduces claims costs and, eventually, premiums. Case president Yeo Guat Kwang said it has discussed the no-fault regime with the General Insurance Association (GIA).
He added that "the reception was quite positive".
Nowadays, claims involve many parties - lawyers and even doctors...this will definitely cost more," said Mr Yeo.
After roping in the Automobile Association of Singapore (AAS) for feedback, Case and GIA will table a joint proposal to the Monetary Authority of Singapore (MAS) later this month.
The new suggestion comes on the back of skyrocketing claims, which have driven motor insurance rates up in turn.
Last year, motor claims hit a record $742 million, leading to motor insurers suffering an underwriting loss of $214 million, an all-time high.
The increase has occurred despite repeated efforts over the last two decades to stamp out inflated and fraudulent claims, including instituting independent damage assessment centres and encouraging motorists to make on-the-spot accident statements.
Much finger-pointing has taken place as a result. The GIA has blamed motor workshops, lawyers and doctors for fraudulent claims. These groups, however, say the insurance industry needs to take a harder look at itself ? specifically how it investigates claims.
Meanwhile, motorists are decrying the rise in premiums, and say they are at the mercy of insurers.
Case's Mr Yeo also highlighted that laws in Singapore which govern motor insurance were enacted more than 60 years ago, and need revising.
Another change Case is proposing is making accident statements legally binding.
"Right now, it is just a piece of paper, and insurers who suspect that someone is not telling the whole truth can't do anything about it," he said.
But if these reports are statutory declarations, a person can be taken to task if he is found to be not telling the truth or concealing relevant information.
Mr Yeo also said insurers need to be more transparent about what goes into the cost of a premium.
"Commission makes up as much as 15 per cent of the cost," he said. "This is quite high. If it can be brought down by 10 per cent I'm sure many motorists will be happy."
Case and the AAS are putting together a "stakeholders' committee", which will include insurers, as well as the relevant authorities, to look at how things can be improved.
"We hope to receive more suggestions from the public," he said, adding that feedback can be sent to Case or the AAS.
Commenting on the no-fault proposal, GIA president Derek Teo said: "We like the idea, but we have to evaluate it carefully to examine all the pros and cons.
"It is a change that is very drastic."
Another insurer said no-fault insurance "may work against good drivers".
In countries which have adopted such a regime, several have decided recently to move towards a hybrid system that allows negligence cases to be pursued in court. This apparently fixes a shortcoming in a purely no-fault system - some see it as being too easy on bad drivers.
The GIA does not have readily available data on how no-fault regimes actually affect premiums.
But a study done by California's Foundation for Taxpayer and Consumer Rights in 2005 found states which had one form of no-fault system or another had higher average motor premiums than those which did not.
