Published November 24, 2004 Business Times
AIG maintains hold on new-car insurance market
It expects to provide cover for at least 1 in 2 cars registered
this year, as it did last year
By SAMUEL EE
HALF of all new vehicles registered in Singapore are insured with
just one company - AIG.
In terms of premiums, AIG is the No 2 motor insurer in a market it
dominates with two other companies - NTUC Income and AXA. But when
it comes to the number of new vehicles, AIG is tops. The American
insurer estimates that it will provide cover for at least 50 per
cent of the expected 110,000 or so passenger cars and commercial
vehicles registered in 2004.
To date, the number of policies AIG has written in 2004 has
increased 17.5 per cent over the same period in 2003. Last year,
AIG insured about 50,000 new vehicles out of about 96,000 vehicles.
Coming a distant second is local insurer Income, which has about 14
per cent of the new vehicle market. As expected, French insurer AXA
is third, with about 11 per cent.
But in terms of premiums, the three insurers' market share is
markedly different. Based on third quarter figures from the General
Insurance Association of Singapore (GIA), Income is the market
leader with about 38 per cent, AIG with 18 per cent and AXA, 10 per
cent. Together, they have two-thirds of a market worth about $700
million last year.
The reason for the difference, AXA explained, is that the new car
market is traditionally tied up with certain insurers. 'Most
popular makes such as Toyota, Nissan, Hyundai and Honda work
exclusively with one insurance company and AXA is one of them,'
said AXA executive vice-president Patrick Font, adding that two of
the dealerships AXA is connected to are Honda and BMW.
In AIG's case, it has ties with - among others - Toyota and Nissan,
which are the No 1 and No 3 makes in Singapore respectively. 'Our
insurance products are available in seven out of the top 10
dealerships in Singapore,' said Rudi Spaan, president of American
Home Assurance Singapore (AHA), a member company of the AIG group.
He said that the main selling points of AIG policies are the
New-for-Old coverage - a benefit which replaces an insured car with
a new one in the event of a total loss in year one - and repairs
for up to 10 years with the original dealership, if renewed under
the dealership programme.
'Many other products in the market limit the repair choice of the
customer and often exclude the original dealership,' said Mr Spaan.
'This in turn could jeopardise manufacturers' warranty and hence we
promote car owners to repair their vehicle with their authorised
dealership.'
Unlike AIG and AXA, Income's policyholders have to visit an
Independent Damage Assessment Centre or Idac in the event of an
accident. Repair work is assigned to workshops which offer the best
price but Income will allow engine-related repairs at the
authorised agent's workshop.
'Most of the buyers of new cars are insured for the first year with
the insurance company that is tied with the car dealer,' said
Income CEO Tan Kin Lian.
'A large percentage of these owners come to NTUC Income during the
second year, as our premium rates tend to be more
competitive.'
Income said that its car premiums are about 10 per cent less than
the other top five motor insurers - AIG, AXA, Asia Insurance and
India International Insurance.
The distributor of a popular Japanese make said insurers which are
not part of Idac - like AIG and AXA - are more attractive because
they allow car owners to visit workshops run by the dealerships
themselves. 'By ensuring that our customers return to us for
repairs, we can control the after-sales market,' he said.
AIG's Mr Spaan said that not subscribing to Idac means his company
provides 'a true one-stop shop experience'.
