Caring insurance regulator sorely needed

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Caring insurance regulator sorely needed

Postby admin » Thu Jul 08, 2010 3:15 am

I refer to C.S. Lim’s letter “Help for vehicle owners who can’t get coverage” (The Star, July 1).

He claims that motor claim losses exceeded 100% in the last four to five years and that third party injuries have skyrocketed to 288% in 2008 and 292% in 2009. This seems to suggest that motor insurance is a chronic losing business.

If this is true, then insurance companies are providing a welfare service for the citizens of this country in spite of threatened insolvency. They probably deserve government subsidy.

But the kind of losses described by him cannot be true because insurance providers seem to be getting fatter and bigger every year. They also fiercely compete for more business from motorists.

Their stakeholders, including executives and senior officers, live affluent lives. They live in good homes, drive expensive cars and frequently dine in the most expensive restaurants.

What was stated in the letter needs to be scrutinised carefully. Claims submitted by insurance companies are inflated by adding various incidental costs, including legal fees. There may also be spurious claims submitted by collaborators. What is not revealed is how much insurance companies actually pay out in compensation every year.

Many claims end up reduced substantially or not paid at all. This is because insurance companies hire lawyers who know how to drag these claims over many years, for­cing claimants to settle for smaller sums. Some claims are not pursued because the claimant runs out of resources or dies while waiting.

Insurance companies also indirectly influence the regulator. They do this by organising talks, “refresher courses” and risk management studies. These events are held in luxury hotels locally and overseas and employees of the regulator are invited and expenses fully paid for.

A better way of understanding the real situation with regard to claims is for the Government to appoint an independent body that will study the financial statements of these insurance companies.

The letter written by Ganesha­deva dated June 28 is touching.

He is a retiree, a safe driver, has an old car and wants to take a third party insurance. The insurance company has denied him this opportunity simply because it wants to squeeze as much as it can from everybody.

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