We were able to offer lower premium rates to more than 300,000 policyholders and still produce a profitable business.

For many decades, Singapore insurance managers knew that dishonest workshops inflated the repair bills on third-party claims. These workshops aggravate the damage to inflate the repair bills, claim for parts that are not replaced and exaggerate the repair time to claim a higher compensation for loss of use.

They use lawyers to lodge third-party claims against the insurance companies. The legal fees are added to the total claims. If insurance companies do not settle the inflated claims, the lawyers are quick to file a legal suit, which takes the cases into the domain of the courts. This further increases the legal fees and now court costs are added.

To avoid the high legal fees, many insurance company assessors prefer to settle the third-party claims, although they know that the claim amounts have been exaggerated. The higher claim payments are ultimately reflected in higher insurance premiums paid by motorists.

What can be done to reduce inflated claims?

Six years ago, the insurance companies introduced independent damage assessment centres (Idac) in a scheme that required motorists to report at an Idac centre for the damage to be assessed on the spot, before the vehicles are sent to the workshop. This reduces the opportunity for the workshop to aggravate the damage. The Idac scheme was intended to apply to all claims, including third-party claims.

Many motorists who experienced the service of the Idac centres gave positive feedback on the convenience and their reliability.

Unfortunately, some insurance companies withdrew from the scheme and without full participation, Idac centres cannot play their role in controlling inflated third-party claims. This led to the escalation of motor claims during the following years.

The Idac scheme is the best way to control inflated claims and I hope that the insurance companies will review their position.

Another solution is for the Government to make it mandatory for a motorist to lodge a third-party claim directly with the insurance company immediately after an accident. This will allow the company to assess the damage and settle the claim, without involving a lawyer. If the claim is in dispute, the owner can then engage a lawyer to handle the case. This is a common practice in many other countries.

Without legislative support, it is a constant cat-and-mouse game with the dishonest workshops. Insurance managers must devise many checks and controls to manage the dishonest claims. It is expensive and tiresome.

Tan Kin Lian