Time to relook how older drivers are insured: MAS

Evening traffic along East Coast Park. The Monetary Authority of Singapore (MAS) has asked motor insurers to re-examine the way they treat older drivers, following mounting complaints from them of higher premiums and being denied cover when they cros
Evening traffic along East Coast Park. The Monetary Authority of Singapore (MAS) has asked motor insurers to re-examine the way they treat older drivers, following mounting complaints from them of higher premiums and being denied cover when they cross 65 years of age. -- ST FILE PHOTO: KUA CHEE SIONG

Growing complaints of hike in premiums, cover being denied beyond age 65

The Monetary Authority of Singapore (MAS) has asked motor insurers to re-examine the way they treat older drivers, following mounting complaints from them of higher premiums and being denied cover when they cross 65 years of age.

It has urged them to look at offering "a suitable motor insurance product for older drivers", a spokesman for the regulator said.

The call was made after recent discussions it held with the General Insurance Association (GIA), the spokesman added, noting that while motor insurance is generally available for older drivers, "the premiums are higher".

The MAS did not specify what the insurers should do but the Land Transport Authority said last week it was "reviewing" a suggestion for a MediShield-like scheme with "relevant parties".

MediShield is a low-cost basic medical insurance scheme.

The suggestion was made by the Automobile Association of Singapore (AAS).

It represents 83,000 motorists in Singapore and a growing number of them struggle to get insurance cover, said AAS chief executive Lee Wai Mun.

As Singapore's population ages, the issue poses a serious "mobility challenge" if it is not resolved, Mr Lee added.

Insurers, however, are opposed to the MediShield-like idea.

The reason: An insurer's liability is capped with MediShield but in motor insurance, the liability is "limitless", said GIA's executive director Derek Teo.

This would be the case, he added, in a serious accident with multiple deaths, serious injuries and severe damage to property.

Mr Teo also said there is no industrywide prejudice against elderly drivers, although "providing motor insurance cover for them is a challenge for insurers".

The cover that insurers provide varies according to each company's "risk appetite", Mr Teo said.

But he acknowledged that generally, older drivers pay higher premiums, like young, inexperienced drivers would too.

While older drivers tend to be less aggressive or reckless on the road than their younger counterparts, their reflexes are also slower, he noted.

As a result, many insurers are reluctant to accept elderly clients, he added.

DirectAsia.com, an online insurance provider, said it provides quotes to older drivers only on a case-by-case basis.

Insurance brokers interviewed also said most insurers will refuse to provide cover for drivers older than 65, even though the Traffic Police lets those 65 and older continue to drive as long as they pass a medical check-up once every three years.

But older drivers can improve their chances of getting cover when they have a maximum no-claims discount and drive sedans, Mr Teo said.

They should also agree to pay a higher excess rate, which is the initial amount of a claim that has to come out of a motorist's pocket.

The rate, however, can be exorbitant, said retiree Jack Chew.

His excess on a policy he bought from an American insurer rose from $2,500 in 2008 to $3,500 in 2010, after a minor accident in late 2008 when he backed into an illegally parked car.

"The change was not announced to me," the 75-year-old said. "It was made in the fine print."

He switched to a local insurer that gave him an excess of $600.

christan@sph.com.sg