Kelvin Khoo Online

The 52-year-old got a shock when the other driver, whose Nissan Sunny sedan sustained a minor dent on the front right fender, filed claims amounting to $18,000, the bulk of it for personal injury.

This kicked off, for Mr Amirul, nearly nine months of trying to convince his insurer NTUC Income that the other party was making exaggerated claims.

Then last week, he got another shock: NTUC Income wrote to say it no longer wanted his business. In a letter to Mr Amirul’s wife, in whose name the car is registered, Income noted that the car’s insurance would expire next month, and that it was not ‘inviting’ her to renew the coverage with the company.

Mr Amirul said: ‘We’re disappointed. We were trying to make some sense of how a minor accident could result in such high claims.

‘We wanted to protect our no-claim bonus, but at the same time, we were trying to help Income save some money.’

With the help of a private investigator they hired, the Amiruls said they found inconsistencies in the claims made by the other driver, who is an AIG insurance agent.

These include:

This tough stance is the latest attempt by the insurance industry to curb runaway claims, which drove motor underwriting losses to a five-year high of $103.2 million last year.

The picture continues to look bleak this year: In the first quarter, motor-underwriting losses hit $35.3 million - nearly treble that for the same period last year.

Insurers reckon inflated claims are a major cause. These claims are often filed well after an accident.

Although it has long been a legal requirement to report all accidents, this is the first time insurers are insisting on a 24-hour timeframe so ‘fresh information’ is at hand.

Insurers also believe people are less likely to lie or have less chance to collaborate with workshops to submit inflated claims within the first 24hours of an accident.

In announcing the new step, the General Insurance Association (GIA) - which represents about 30 motor insurers here - said yesterday that car owners will lose 10 percentage points of their NCD if they do not comply.

NCDs are given annually to motorists who have not made accident claims, up to a maximum of 50 per cent of their annual premium.

So a motorist who pays a premium of $500 after a 50 per cent NCD and does not report an accident to his insurer within 24hours would have to pay $600 the next time he renews his policy.

Motorists with no NCD will not suffer this penalty, but the GIA warned that those who do not comply with the new rule are in breach of policy terms and an insurer would have the right to refuse their claims.

GIA president Derek Teo said drivers must report an accident even if there is no visible damage to the vehicle.

‘You may have shaken hands with the other driver and parted in good faith but, in real life, he could well file a claim against you months later,’ Mr Teo explained.

To make reporting convenient, all insurers will have 24-hour hotlines.

When a motorist calls, he will be told which workshops he can send his vehicle to. He must then take his vehicle to it within 24 hours or by the next working day.

The GIA will launch a public education programme to tell motorists what they must do in an accident. The drill includes exchanging particulars with the other parties involved, taking note of identity card and contact numbers, home addresses and names of insurers.

Motorists are also advised to take photos of the vehicles involved in the accident whenever possible.

Most crucially, they must avoid unauthorised tow truck or workshop representatives, who often tout at the scene of an accident.

Mr Teo said he is ‘pretty confident’ the new scheme will reduce inflated claims ‘because for the first time, we have the support of all insurers’. This being so, he is hopeful there will be little need for premiums to rise.

Past efforts to curb contentious claims include the setting up of independent damage assessment centres (Idac). But most insurers found the scheme was either not cost-effective or plainly ineffective.

The latest plan has the support of other quarters. Consumers Association of Singapore executive director Seah Seng Choon said it will ‘go a long way in minimising the need to resolve claims and other disputes’ between consumers and insurers.

Automobile Association of Singapore senior manager Leslie Wong added: ‘We can look forward to a more open and fair system…where the interests of all parties, especially the motorist, can be better safeguarded.’

christan@sph.com.sg

He sent his car to be repaired at a ‘major workshop’, which claimed $6,423.80 from the taxi’s insurer.

That total was more than six times the initial estimate of $1,000 for repairs which were to have taken ‘two to three days’. The bill included the cost of renting a replacement vehicle for seven days.

Mr Chee said: ‘I asked to see the damaged parts they replaced and the breakdown of the bill, but they couldn’t show it to me.’

He thought the bill had been inflated and told the workshop it was wrong to do that, but the manager said: ‘Don’t worry, you don’t have to pay a cent.’

His account was among over two dozen sent in by readers responding to a Sunday Times report on inflated motor insurance claims.

Going by their recollections, the problem has been around for several years.

Account manager Jonathan Ng, 33, is still incredulous when he recalls the car workshop claims agent who told him to feign whiplash following a 2003 fender-bender.

‘He told me that such injuries are hard to check, and he could recommend some doctors I could go to,’ said Mr Ng, adding that he refused to take part in the charade.

Manager Hazel Low, 33, said that when her Nissan Sunny hit a BMW 7-series in stop-start traffic two years ago, the driver asked for $2,000 in compensation on the spot.

When she could not pay up, he made a $14,000 claim against her insurer, which included $4,000 for ‘pain and suffering’.

She protested, and her insurer finally whittled down the payout to $7,300, which she still thought was excessive.

Observers reckon exaggerated claims are still fairly common, despite repeated attempts by the insurance industry to address the problem.

In 2004, parties involved in a road accident were asked to fill in the Singapore Accident Statement on the spot. The scheme failed because motorists, still traumatised by an accident, were in no shape to deal with a complex form.

Two years before that, insurers set up Independent Damage Assessment Centres (Idac) so damage to vehicles are documented before they are sent to workshops. Over the years, member insurers started dropping out when they found the plan was not as efficient or cost-effective as they thought. Some said their customers did not like making that extra trip to these centres.

Before Idac, there were accident reporting centres, set up by insurance giant NTUC Income and sited at petrol stations.

The industry is making another play to tackle the problem of inflated claims. Next month, parties involved in a car accident will have to inform their respective insurers within 24 hours. The insurers will do the rest, from arranging for a replacement vehicle to making third-party claims.

Punitive measures are said to be in store for those who do not report accidents within 24 hours.

In another attempt to contain costs, non-injury motor claims disputes below $1,000 will now be addressed out of court - by the Financial Industry Disputes Resolution Centre (Fidrec).

Set up in 2005 by the financial community to settle finance-related disputes without incurring legal fees, Fidrec has had a promising start. In its first 22 months, it dealt with 2,708 cases, comprising 1,024 complaints and 1,684 inquiries. It has resolved eight in 10 complaints.

Observers expect it to handle motor-related injury claims disputes next.

Injury claims have become a new worry for insurers. Industry players say the claims, which are often several times larger than those for vehicle repairs, will spiral out of control if unchecked.

They suspect that like damage claims, many are exaggerated or completely false. The most common ‘injury’ is whiplash, which results from the head being thrown forward and jerking backwards in a collision.

Dr Winston Lee, 64, a medical doctor and motoring enthusiast, said it is the easiest injury to fake. In mild cases, it is impossible to tell, unless the person undergoes magnetic resonance imaging screening, which costs $800 to $1,000 a pop.

One leading insurer says it received on average 300 injury claims a month last year - more than double the 140 a month it received in 2006.

Insurance sources blame ‘ambulance-chasing’ lawyers for the rise in claims, both injury and non-injury.

Industry estimates have it that 25 to 30 per cent of last year’s 151,583 reported road accidents would have involved legal intervention; of the lot, 30 per cent were handled by three law firms.

But the Law Society says it is unfair to blame lawyers for inflated insurance claims, noting that it had so far come across only three such complaints and all three were dismissed after investigations by independent inquiry tribunals.

Some lawyers point the finger at motor workshops, which in turn say insurers tend to drag their feet with claims not accompanied by lawyers’ letters. Workshops which engage lawyers therefore inflate repair claims to cover their legal fees.

Then, there is the greed element among consumers. Since mid-1999, when motorists were no longer required to report non-injury accidents to the police, the number of accident reports has been soaring.

A private eye who has been investigating claims for 15 years said drivers who back into carpark walls have been claiming they were hit by another vehicle.

‘When we find concrete marks on the paintwork, they sheepishly admit they banged into a wall,’ he added.

One driver who did not want to be named remembers a colleague who boasted that he made $6,000 by faking an injury from a minor accident. The colleague refused to be interviewed.

While many say insurers and the authorities should lick the problem, some reckon individual motorists have a big part to play too.

Dr Wong Kai Peng, 60, said: ‘Many of us tend to have a very lackadaisical attitude towards insurance claims. We very wrongly assume that as long as we are not paying the claim, we aren’t bothered with the quantum made against us.

‘But we are the ultimate losers. These costs will be ultimately borne by us in the form of higher premiums.’

christan@sph.com.sg