THE motor insurance market is expected to grow in the year ahead, given a rising number of rental vehicles, greater use of telematics and the trend of buyers of new cars being younger.
AIG Asia Pacific Insurance said on Wednesday that these trends have emerged at a time of growth in the sharing economy, and that this could lead to a 20 per cent rise in the number of rental vehicles on Singapore roads next year.
Manik Bucha, AIG Singapore's head of auto insurance, said the arrival of international transport players such as Uber and Grab and homegrown car-sharing enterprises such as iCarsClub and Smove, are increasing the exposure for road users and affecting the way insurers underwrite risk.
"Not only are drivers who use rental cars for commercial enterprise more likely to clock higher mileage and spend more time behind the wheel, but many are young drivers, who are almost twice as likely as the average driver to have an accident."
AIG, referring to the rise in number of younger buyers of new cars, said this segment of drivers has run up a 33 per cent rise in third-party property damage claims in the past year; such claims signal that young drivers are getting involved in more "at-fault" accidents.
Mr Bucha said the number of road accidents can be expected to rise, but that advances in technology will enable the monitoring of driving habits; the science of telematics - which combines telecommunications and informatics - can track acceleration, breaking and cornering, and thus improve driving behaviour.
The insurer said its road-safety survey last year found that nearly seven in 10 Singapore drivers (68 per cent) would consider installing a telematics device in return for lower car-insurance premiums, and that more than half the drivers said telematics would improve their driving habits.
Mr Bucha said: "We expect that the growing adoption of telematics devices by insurers and drivers will reduce road risks and improve community safety, and eventually lead to a 10 per cent or greater decrease in auto-insurance premiums over the next two years."
To this end, AIG Singapore is looking to launch a telematics smartphone app soon, to give motorists real-time information on their driving, a score for each completed trip and driving tips. The app is aimed at promoting safer driving and offering rewards and challenges.