https://www.straitstimes.com/business/insurer-income-may-underwrite-fwd-s-motor-insurance-plans-sources-say

Under the potential plan, FWD would likely be the distributor of the motor insurance policies. PHOTO: ST FILE

SINGAPORE - Digital insurer FWD’s motor insurance business will soon be underwritten by local composite insurer Income, as the two firms sealed a deal.

FWD Singapore on June 27 told its customers that Income will from July 2 underwrite and issue FWD’s car and motorcycle insurance policies. Under the deal, FWD will be a distributor or seller of the motor plans.

The announcement to customers came after The Straits Times reported about the move on June 27.

People familiar with the matter said FWD’s motor insurance renewal business is valued at about $16.9 million, based on its 2023 gross written premiums.

Income, whose pricing for motor insurance is higher than FWD’s, will continue to price the plans the way the former has been doing, and bad risks will be priced accordingly, said a source.

Market observers said for Income to break even, new customers and existing ones who renew their plans can expect to pay premiums that are roughly 15 per cent to 30 per cent higher. This range is based on Income’s current premiums.

One of them said: “They (Income) will have to decide who they want to keep and who they want to throw out. Realistically, I cannot imagine anyone continuing to renew if there is a 30 per cent increase. There are still three other direct-to-consumer players; at least for the next 12 months it would appear to be so.”

When asked, both FWD and Income declined comment.

This comes as FWD struggles with the loss-making motor insurance business – something not unique to the firm.

Motor insurance is the largest component of the general insurance business in Singapore, but it has been loss-making over the past two years.

Based on data from the General Insurance Association of Singapore (GIA), motor insurance made up 21 per cent of gross written premiums in 2023.

Observers say that the business is a highly cut-throat one in Singapore, with dozens of players in a small market. Documents seen by ST showed that, in 2023, general insurers offering motor insurance coverage clocked a $7.7 million underwriting loss, which was way better than the $21.6 million loss in 2022.

Of the insurers, Income recorded the most underwriting profit at $44.5 million in 2023. FWD posted an underwriting loss of $3.7 million in 2023. It swung into the red in 2022 with a loss of $400,000, according to a document.

A key reason for the trend is the rise in claims.

In March, GIA said the motor segment saw the largest increase in net incurred claims in 2023, which jumped 73.3 per cent to $573.4 million, as traffic accidents rose. There were 149,451 accident report counts in 2023, up from 139,019 in 2022 and 123,485 the year before.

In mid-June, ST reported that German insurer Allianz was in talks with Income to acquire a major stake in the latter.