MAY 15, 2020 08:16 AM (EDT)
AM Best: Singapore Non-Life Sector Posts First Underwriting Loss in a Decade (AM BestTV)
FOR IMMEDIATE RELEASE
OLDWICK - MAY 15, 2020 08:16 AM (EDT)
For the first time in a decade, the Singapore non-life insurance segment recorded an underwriting loss in 2019. Tran highlighted the factors that led to this result.
“Even before 2019, AM Best saw a trend that showed a decline in underwriting results for the entire market. The key reason was the increase in loss ratio for motor insurance, as well as a very high loss ratio for health insurance,” said Tran. “It is very hard in Singapore to raise the price of motor insurance because the number of car sales in Singapore is fairly limited, given the restriction on vehicle licenses in Singapore. Furthermore, even after the pandemic, AM Best does not expect that trend to go down.”
Pliss said Singapore’s non-life insurers should be able to weather the COVID-19 pandemic.
“Despite uncertainty, AM Best expects the negative impact of COVID-19 on claims to be relatively limited,” Pliss said. “On the medical side, the government covers the bulk of COVID-19 treatment expenses. However, in AM Best’s opinion, the more significant impact will come from the investment side. Lower interest rates and dividends, as well as a decline in value of equity holdings, will result in reuse of investment income, and potentially overall balance sheet contraction for the industry.
“Growth may be extremely challenging to achieve for the insurance industry, not only in 2020, but also in subsequent years. It is very likely that the industry will face reductions in premiums in multiple lines of business.”
To access the related commentary, titled, Singapore Non-Life Insurance: COVID-19 Impacts Add to Deterioration in Underwriting Results,” please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=296598 .
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AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong , Singapore and Mexico City.