Car insurers in race for business
THE car thefts that decimated insurance company profits in 1992 and 1993 have lost some of their sting and, for insurers and motorists, that means a smoother playing field may now be in sight.
In the past three years, more than 6,000 cars are thought to have been stolen from Hong Kong and smuggled to China.
In the fall-out, motorists, especially owners of the often targeted luxury cars, were forced to pay higher premiums to insure their vehicles.
Insurers, meanwhile, were forced to reassess their underwriting risks and while some companies modified the cover they would provide, others refused to insure the most-frequently stolen models.
The decline in the number of cars being stolen began last year with just 2,280 thefts reported compared to 4,334 in 1992. In the six months to June this year, 970 cars were stolen and although a fresh outbreak was reported last month, the final tally for 1994 is expected to be considerably lower than in 1993.
In 1991, Hong Kong insurers reported a loss of $219.1 million on vehicle insurance. By 1992, this figure had risen more than 150 per cent, with insurance companies losing close to $600 million.
Industry experts say losses this year are expected to be down by 30 to 40 per cent.
And profits may already have returned for some companies.
The number of firms offering discount insurance deals and paying higher commissions to agents and brokers indicates insurers are again making money on the sale of insurance premiums, said K. S. Choy, manager for the Accident Insurance Association of Hong Kong.
Not only should car insurance now be easier to get, it should also be cheaper.
According to Dominic Lam, National Mutual's general insurance division manager, premiums for middle-range cars should now be between 10 and 25 per cent cheaper than they were two years ago. However, luxury car owners may still find companies have begun to specialise in what they will cover. For example, new Mercedes Benz are now insured by Lombard General Insurance Limited.
According to Malcolm Clarke, the chairman of the General Insurance Council of Hong Kong, about 84 companies are authorised to sell motor insurance premiums but only 70 are thought to be active.
'There may have been some companies who decided not to insure certain cars, especially luxury models, and it's quite possible they are now insuring them again,' he said.
While insurers explore the market's renewed confidence, a new car insurance scheme for cardholders is about to be launched by charge card company American Express.
The new policy is designed to protect no-claim discounts, the incentive system where drivers who have made no accident repair claims pay lower premiums. The No-Claim Discount Protector Motor Insurance has been underwritten by Winterthur Swiss Insurance, the sixth largest insurance company in Europe.
No-claim discounts are awarded by most insurance companies at a rate of 10 per cent each year and to build up the maximum 60 per cent discount, drivers cannot make an accident repair claim for at least six years.
When a claim is made, even if the accident is not the fault of the driver, the insurance company takes away 30 per cent of the no-claim discount. Shortfalls in a driver's no-claim discount are added to the next annual premium.
Under the American Express scheme, policy holders can make one claim in a year and up to two in five years without losing their no-claim discount.
A driver with a 60 per cent no-claim discount could buy comprehensive insurance for a 1994 Honda Civic saloon for $8,322 per year, while a 1989 Mercedes Benz 190E could be insured for an annual premium of $9,115.
Third-party policies, the insurance selected by about half of private car owners, are also available. At American Express, the third-party premium for a 1991 BMW 5201 costs $1,030 a year.
'This isn't an attempt to break into the motor vehicle insurance industry,' said American Express marketing and sales vice-president, Lana Chiu.
'We are in the card business and are always looking for additional benefits and services for our members.'