GIA MOTOR INSURANCE RATES (Government stand)

Mr Abdullah Tarmugi asked the Minister for Finance what is his Ministry's stand on the proposal by the General Insurance Association to fix the rates of motor insurance premiums in 1988.

Dr Richard Hu Tsu Tau: Mr Deputy Speaker, Sir, the question from the hon. Member for Siglap implies that the General Insurance Association (GIA) is proposing to introduce a rate cartel. However, I am assured that this is not the case. In fact, as a matter of policy, the GIA has abolished the use of minimum tariffs since 1981.

What the GIA is presently undertaking is a statistical study of past experience of motor insurance with a view to devising a rating structure which will better reflect the risk characteristics of the motor vehicle and the driver to be insured. This is essential for prudent underwriting by insurers. The statistical study would provide an objective basis for risk classification and premium rating. Each insurer will be able to use the results of the study independently as a guide for underwriting motor risks. Indeed, the Insurance Commissioner has been assured by the GIA that the resulting rate structure and premium rates would only serve as a voluntary guide, and that there is no proposal for a rate cartel.