THE NONLIFE insurance industry is looking at setting guide rates for new products that will cover motorcycles and electric vehicles (EV) because companies that cover these sectors are selling at a loss, the Philippine Insurers and Reinsurers Association (PIRA) said.
PIRA Executive Director Michael L. Rellosa told reporters last week that for one, they have very little information about how motorcycle taxis are doing. “So we’re learning as we go. And apparently, some of the early companies who wrote it first, are starting to get losses.”
He also said motorcycles used in ride-hailing apps have coverage already, but companies that cover them have been experiencing losses that continue to rise.
“So, we have to look into how best we can rate it going forward,” he said. “Now, the Insurance Commission is also asking the industry to come up with guide rates, but right now, we’re still in the process of collecting information.”
Latest data from the Insurance Commission showed net premiums from the motor sector rose by 8.42% to P13.82 billion at end-June from a year earlier.
“The information that we need is premiums versus losses, so we can arrive at the technical rate — the rate that covers the risk itself,” Mr. Rellosa said.
He added that insurers need to factor in not just the driver of motor taxis, but also the passengers because motorcycles are more prone to accidents.
Mr. Rellosa said only about five companies have started writing coverages for motorcycle taxis, while others are still looking into it.
“The others are waiting to see how it goes, if it’s going to be a profitable line for them to go into. And the jury’s still out. They need more information to make a decision,” he added.
PIRA has reached out to the Metropolitan Manila Development Authority (MMDA), Land Transportation Franchising and Regulatory Board (LTFRB) and Land Transportation Office (LTO) for data on accidents related to the sector, he said.
“We also wrote to the companies that have initially written that kind of business and they haven’t gotten back to us yet,” he said. “But once we have some semblance of data we can rely on or trust, we can make the correct assumptions and we can extrapolate the rate, pass it through actuarial analysis and all that.
Mr. Rellosa said the industry is also evaluating the rates needed to cover electric and hybrid vehicles.
“We know the cost [of combustion engines] and all that,” he said. “We’re used to that. While for electric vehicles, the battery itself costs 50% of the vehicle. So the valuation is off.”
Aside from rates, the industry is also formulating the proper coverage for EVS. “Again, we cannot use the normal motor policy because it just doesn’t add up. There are different or new kinds of risks that come with the electric and hybrid vehicles,” Mr. Rellosa said.
EVs are also more affected by potholes, road bumps and flooding because most models are built with the battery at the bottom of the car, he added.
“There are so many new issues that are coming with the new types of vehicles. But the industry has to catch up. We’re a little slow,” Mr. Rellosa said.
Total net premiums written by nonlife insurance companies rose by 7.14% to P32.89 billion in the first half from a year earlier, based on data submitted by 52 out of 56 licensed firms. — Aaron Michael C. Sy
Insurers eye guide rates for motorcycle taxis, EVs
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