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Car insurers innovate to put a brake on falling premiums

Car insurance providers are finding new ways to serve customers in a competitive business environment. Industry watchers say they are seeing more customised products and more insurers are offering a digital platform for clients.

SINGAPORE: The motor business makes up more than one-third of Singapore's general insurance portfolio. While this segment has turned profitable in the past two years, the overall environment is still challenging due to keen competition and fewer registration of new cars. Premiums for the segment dipped about 2 per cent to S$1.2 billion over 2013.

Analysts say insurers are taking a different approach to serving the market. "There is a greater effort to develop customised offers for specific sub-segments, which is great for the client as long as it's easy for them to understand, and transact at the same time, said Mr Mohit Mehrotra, the Executive Director at Deloitte Consulting. "The other thing we're starting to see is greater plays by third party aggregators, comparators to ensure that clients can compare and see different offers and thereby hopefully transact going forward on these digital channels. 

"Overall, we see greater embracement of digital going forward, and over the course of time, greater shift towards not just online searches, but also online transactions." 

Based on an international study done by consulting firm, PwC - car insurance was the most popular type of coverage managed online, with some 38 per cent of consumers saying they do so. More than 80 per cent of survey respondents from Singapore cited ease of access as why they buy insurance online.

Online insurer, DirectAsia.com, says its business model has done away with agents, making premiums cheaper. 

"DirectAsia.com provides insurance customers with greater value through lower premiums - in some cases as much as 30% on traditional agent-sourced premiums - increased, more transparent and tailored product choices; and fast, efficient claims services achieved by establishing a direct relationship with the customer, eliminating the need for expensive insurance agents and middle men, thereby cutting away the cost of their commission from the price of insurance," said Ms Rachelle Lee, the head of Group Marketing at DirectAsia.com.

Meanwhile, AXA Insurance, has recently launched a new product, that allows customers to pick and choose their coverage according to their needs.

"We move from mandatory insurance with some add-ons, as most products are today, mostly based on the car-make.We move towards a product which combines mandatory insurance, with the coverage and protection for all the needs which the driver and family or passengers need," explained the CEO of AXA Insurance Singapore, Ms Doina Palici-Chehab. "The customer pays only for what he wants to have from what he needs and doesn't need to pay for things which are just in the package."

Consultants say non-life insurers are generally lagging behind other industries in making use of digital technology. but they expect more to get on the bandwagon in the coming months. 

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