Motor insurers made a startling turnaround on the earnings front in the second half of last year, it was reported yesterday.
They posted an underwriting profit of nearly $10 million for the 2018 financial year, up from a loss of $12.6 million for the first six months of the year, a stark improvement that was attributed to year-end account housekeeping.
The General Insurance Association (GIA) last September said there had been a "significantly higher increase" in incurred motor insurance claims for the six months to June 30.
That left the sector with an underwriting loss of $12.6 million for the period, it noted yesterday, adding that the motor segment - which accounts for nearly one-third of the general insurance business - had been in the red for three consecutive quarters.
The GIA told yesterday's results briefing that year-end housekeeping had helped change the industry's fortunes in the second half.
Motor insurers posted an underwriting gain of $9.96 million for the full year compared with a loss of $27.2 million in 2017.
The GIA attributed this to a year-on-year shrinkage in the taxi and private-hire car population.
It pointed out that private-hire car numbers had shrunk 2.4 per cent while the taxi fleet fell 11.1 per cent. As these two groups together account for the most accidents per vehicle, a drop in their numbers would mean fewer claims.
Overall, the general insurance industry recorded stable growth last year, with gross premiums rising 3.4 per cent to $3.81 billion.
Rise in gross premiums for the general insurance industry last year to $3.81 billion. However, profit plunged to $37.7 million, down from $107 million in 2017.
However, profit plunged to $37.7 million, down from $107 million in 2017. This was largely owing to a weaker performance in health insurance - the second largest sector with a share of 15 per cent. It incurred a $44.2 million underwriting loss on the back of an 18.2 per cent increase in incurred claims.
The health loss was the largest among all sectors in the industry.
The GIA said this had to do with not only the number of claims going up but also the value of these claims, given the ageing population and pricier new medical treatments.
The sector largely covers hospitalisation plans that employers buy for their staff.
Likewise, the Work Injury Compensation insurance segment incurred a loss of $3.6 million - its first in five years. The personal accident insurance sector posted an underwriting profit of $17.3 million.
GIA president Karl Hamann said the association's priorities for the year include "investing in digital technologies to manage claims cost inflation".
The artificial intelligence-powered Fraud Management System launched in 2017, for instance, has flagged around 9,000 suspicious cases. The GIA said "a handful" of these are being investigated.
The association has also introduced a reward system to address insurance fraud. People who provide tip-offs that result in a conviction will be paid up to $10,000 but they must be prepared to be identified, as evidence such as text messages and e-mails are likely to be used in court hearings.
Mr Joey Lim, adviser to the Singapore Motor Workshop Association, said: "Unless this scheme guarantees anonymity, it will not work. People are generally afraid to get into trouble.
"People who commit insurance fraud are usually quite fierce people. That means if you dare to expose them, you must be fiercer."