Understanding your car insurance (Singapore) premiums can be quite a baffling thing. Numerous drivers have questioned about their car insurance premiums and yet have little understanding on how it all works.

This post give readers an insight on how car insurance companies in Singapore price their premiums – a real insider’s guide to the inner mechanism of how it works.

Car insurance premium is derived based on a Points System that takes mainly the following 2 categories of factors into consideration:

Category #1: Characteristics of Driver (Insured)

a) Age of Driver. Here’s the age group that most companies use and how much it affects your premiums:

18 to 21 yrs old — $$$$
22 to 25 yrs old — $$$
26 to 30 yrs old — $$
31 to 65 yrs old — $

b) Gender & Marital Status. Generally cheaper for females as compared to males; cheaper for married compared to singles.

c) Driving Experience. Calculated from the time you got your driving license, not your actual driving experience:

0 to 1 yrs experience — $$$$
1 to 2 yrs experience — $$$
2 to 4 yrs experience — $$
> 4 yrs experience — $

d) Job Nature (Indoor/Outdoor). Self-Explanatory.

Indoor – $
Outdoor – $$

e) No Claims Discount (NCD) – aka No Claims Bonus (NCB). This is the premium discount you can enjoy if you have not made claims with your insurance company

You get 10% NCD each year if you don’t make any claims during your policy year. Your NCB can accumulate up to 50% max.

For example, if your auto insurance is $1,000 and your NCD is 20%, the actual premium you’ll have to pay is $800.

If a claim is made during a policy year while you are still enjoying NCD, the NCD will be reduced the next time you renew your motor insurance.

f) Certificate of Merit Discount. A 5% discount is awarded to you (after deduction of NCD, if any) if you have NO traffic offense / demerit point(s) in the past 3 years.

Category #2: Characteristics of Vehicle

g) Engine Capacity (cc) & Engine Type. The lower the engine capacity, the lower your premium. Engine type refers to Normal or Turbo engine – obviously the turbo engine is going to be charged more.

h) Year of Manufacture. This generally means the year which your car is made/register.

i) Body Type. This refers to the type of car, eg. saloon, MPV, SUV, etc. Company usually charge more for unusual types of vehicle.

j) Off Peak Car (OPC). Generally, insurers tend to offer a slight discount for OPC.

Most car insurance (Singapore) quotations are valid only for 14 days, some for 30 days. And the price of car insurance premium change frequently – some people believe that it changes every 6-12 months. Therefore while Company X may offer the best deal this year, Company Y may be more competitive the next year.

This implies that you may have to compare different insurers’ quotes each time you renew your car insurance. You should get a good deal after comparing at least 6-7 companies. Of course, if you want the cheapest of all you’ll have to look for quotes from all the 20++ motor insurance companies in Singapore – and not all of them are good, really. In fact only some are worth looking at.

To compare several quotes, you can take 3 mins to fill in the form at Motor Insurance Singapore.

Return from Car Insurance (Singapore) Premiums – The Insider’s Guide on How It’s Computed to Motor Insurance Singapore Home

The proposal form needs to be submitted and sent (along with the quotation) to the insurer in order for them to underwrite your motor car insurance policy. The underwriter relies on the information given by the car owner to assess the risk undertaken by the insurance company.

Therefore it is important that car owners provide accurate and relevant details as required by the proposal form, to the best of your knowledge.

The following information is usually requested in the proposal form:

- Name & Address Of Car Owner
- Type Of Business Or Trade (If Applicable)
- Driving Experience Of All Drivers, Insured & Named Drivers
- Claims Experience & NCD (aka. NCB) Entitlement Amount
- Type Of Cover (Comprehensive, 3rd Party, Etc.)
- Vehicle Usage
- Whether Your Car Has Been Modified
- Vehicle’s Make & Model, Seating Capacity, Market Value & Year Of Manufacture
- Vehicle Registration Number, Date Of Registration, Engine Number & Chassis Number
- Finance Company (or Hire Purchase Company), if Applicable
- Some Details Of Vehicle’s Accessories

Soon after submission, the Certificate of Insurance or Cover Note can be released to the car owner.

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In the old days (before Sep 1989), insurance premiums were derived using a standard table provided by the General Insurance Association of Singapore (GIA). This table is known as a Motor Tariffs Table.
Under this system, factors such as the ones below were used as a basis for computation:

- Type of Cover,

- Engine Capacity,

- Carrying capacity of Vehicle,

- Car usage, and

- Value of vehicle

After that, the Motor Tariffs Table evolved into the Points Rating System. The major difference between these two systems is that the Points Rating System takes into consideration the characteristics of the driver – age, marital status, indoor/outdoor job, et cetera.

Then in Jul 2001, the GIA formed a Motor Insurance Task Force (MITF), which promulgated a Risk Factor Premium Rating System, improving upon the previous system.

Under this system, points are awarded to various risk factors, based on the industry or insurer’s own risk profile and claims experience.

This means that if there’re lots of people who’re making claims against a particular insurer compared to the other insurers, this insurer will tend to (or rather…have to) charge higher premiums so as to conform to the Risk Factor Premium Rating System. And of course this REALLY makes sense for this particular insurance company’s financial health as well.

Enough of the insurers. Now, let’s talk about you…

What does the above information mean to you?

It implies that even though you have submitted the exact same information to different insurers, the premiums that you’re charged for your auto insurance WILL be different. This is because the points that you’re awarded (internally) by the insurers will be different, due to the company’s own risk profile and claims experience.

Therefore the only logical action that you HAVE to take is to compare several different quotes from different established and reputable auto insurance companies. You’ll thus be able to tell which motor car insurance company gives you the best deal.

Of course it’s a great hassle to do so, but it’s well worth it. And you don’t have to do it yourself if you have a car insurance quote comparison service working for you.

Click Here to go back to Motor Insurance Singapore Home

Readers who are interested in the above article may also be interested in the sponsored links below: