No-fault motor insurance

Hi Mr. Tan,

What are you views on the no-fault motor insurance, that is proposed by the Consumer Association?

REPLY

I sent the following views to the Straits Time. The journalist mentioned it in his report.

There are two types of third party claims and they require to be dealt with differently.

a) Injury claims

For injury claims, it is useful to have a "no fault system" to compensate the injured party, similar to worker's compensation. Here is the experience of such a system used in Sweden. It allows for the compensations to be paid more promptly and fairly, and reduces the litigation cost. See this article in my website:

http://www.tankinlian.com/articles/compensation.html

b) Damage claims

For damage claims, a better solution is for the regulation to require a motorist to lodge a third party claim directly with the insurance company, prior to arranging the repair of the vehicle. The past practice was that the third party will arrange the repair the vehicle with his workshop (who can inflate the claim) and then get a lawyer to lodge the third party claim against the insruance company (hence, adding up the litigation cost as well). (Note: I am not sure if the Motor Claim Framework introduced last year has already addressed this matter).

If the third party damage claim can be put on a proper framework, there is no need to change to law to introduce a "no fault" system for damage claims.