Motorists always accuse the insurance companies of increasing of motor insurance premium every year. Being an independent adviser and dealing with nearly all insurers in Singapore and many claims, I know deeply that it is your fellow motorists are the ones to be blamed.

Not to mention the accidents caused by merely reckless driving like recent Rochor road Ferrari crash motor insurance claim, a lot of insurance losses are due to fraudulent claims.

“Aviva Singapore, estimates that around a fifth of all car insurance claims it receives have been inflated to varying amounts. NTUC Income said it believes that more than half of the injury claims and about one-third of the property damage claims it receives are, to varying degrees, inflated.”

In 2008, GIA introduced the Motor Claims Framework, which requires motorists to file claims with their insurers within 24 hours of an accident. This may have reduced the inflated claims for damaged vehicle but as mentioned in today’s straits times article “Insurers to combat fraudulent claims”,  “an increasing trend of motorists making inflated claims for personal injuries, instead of damage to their vehicles as was prevalent before, since new rules were introduced that allowed insurers to inspect vehicles before paying out a claim.” “There have been cases in recent years of motorists making false or exaggerated personal injury claims of as much as $1 million after being involved in relatively minor accidents.”

In a recent case that went all the way to the Court of Appeal, a motorist lodged a claim of almost $2 million after a minor accident.

Another driver had accidentally reversed her vehicle into the back of his car at 15kmh. The driver said the whiplash from the accident had caused permanent disabilities that made it impossible for him to continue working as a teacher. Eventually, the Court of Appeal ruled in January that since there was little evidence of the severity of his injuries, he should receive only about $90,000.

Insurance is like a company, every policyholder is a shareholder. If the policyholders do not act responsibly, eventually everybody would suffer. In recent years, there have been inflated medical bills against medical insurance. I am very worried health insurance will suffer the same destiny. I will blog about this topic next time.

It can be shocking to many motorists when AXA just decided not to honor the motor insurance claim in the high profile Rochor Road Ferrari Crash. In the crash, the driver Mr Ma had allegedly run a red light in Rochor Road. His car rammed a taxi, which then hit a motorcycle. The accident left three people, including Mr Ma, dead and two others injured.

In court papers filed on Monday, AXA stated that the May 12 crash was a “collision” and not an accident: “Ma Chi was doing an act which he knew or ought to have known was courting imminent danger to himself and others.” … In its court papers, AXA explained that Mr Ma had driven the car at “an extremely excessive speed”. In conducting himself in a “totally reckless and/or dangerous manner”, Mr Ma had breached an “implied term” in AXA’s policy that the vehicle should be driven prudently and not at excessive speeds, said court papers.

AXA’s counterclaim also asked for the estate of Mr Ma to repay all that AXA is liable to pay under the Motor Vehicles (Third-Party Risks and Compensation) Act to those killed or injured in the crash.

This impact of this case is definitely significant and will be the basis for future cases. On contrary to many people’s thinking, in the past, many insurers tend to be relaxed with their own rights and terms to keep good reputation in the market. With increasing claim ratios, insurers are forced to tighten their controls to protect their bottom line.

There are many “implied terms” in an insurance contract by way of common sense. For example, accident caused by drink driving is generally not covered. Construction worker should not be doubled as a driver.  Put sensational factors apart, insurers are really in dilemma to pay for accidents caused by dangerous driving.

I have encountered so many reckless drivers and always wonder if these people cause accidents and the insurers do not pay, ultimately it is the victims who suffer. How many of these drivers have hundreds of thousands to pay the heft medical bills and loss of income of the victims? That is why Third Party Motor Insurance is compulsory.

On the other hand, if such behaviors are compensated by insurance, people will be less responsible for their own acts because they suffer no consequences. As a result, Singapore road will just become more and more dangerous. Having handled so many motor insurance claims, I seldom hear the insured admit their own mistakes or even care about the claim amount, all they care is if they can get a cheaper motor insurance because “I will never knock someone’s car”, but as a matter of fact, they did!

Let’s see how this case will develop.

In today’s Straits Times, “48 hours to access damage in third-party motor claims”, it mentioned

Motorists who file third-party insurance claims after an accident now have to contact the other driver’s insurer before getting their vehicle repaired.

The new rule by the Motor Insurance Taskforce is another attempt to clamp down on inflated and fraudulent claims

I will give more details about the protocol as below:

With effect from 1st May 2011, the Non Injury Motor Accident Protocol (NIMA) mandated by the Subordinate Courts of Singapore, to regulate and guide how road traffic motor accident claims are to be handled, has been amended to allow Insurers to carry out inspection to all damaged vehicles before repairs are carried out.

Click here for the details of Amendments to the Non-Injury Motor Accident (NIMA) Protocol- Pre-Action Protocol