Motor insurance and claims

This letter is written by a financial adviser who faces difficulty in getting renewal for her client after two accidents.

My view
The current insurer refuses to renew the policy. The association representing the insurance companies asked her to try a list of over 27 insurance companies but all of them declined.

If a financial adviser finds this process to be difficult, you can imagine the trouble that will be faced by a consumer who has to get renewal on his or her own. The consumer may not be a bad driver. It may be just bad luck to have two accidents.

This is another example of the failure of the "free market" system. What can MAS do? In many states in America, there is the concept of the "residual market". If the consumer cannot get insurance, they can place the risk with a specified insurer (managing the residual market) who must accept the risk and share it with all the insurance companies. In some jurisdictions, the motor insurance market is run by the state, to overcome this difficulty.

Tan Kin Lian