It will also have an impact on auto insurance industry.
The boom in sharing economy, manifested by international transport players such as Uber and Grab, is set to result into a 20% increase in rental vehicles in Singapore roads in 2017.
According AIG Asia Pacific Insurance Ptd. Ltd, this continued popularity of ride-hailing apps along with the continued growth in the rental vehicle market and increasing use of telmatics will be the top three drivers of the auto insurance industry in 2017.
AIG Singapore head of auto insurance Manik Bucha said Uber and Grab, as well as homegrown car-sharing enterprises including iCarsClub and Smove, are increasing the exposure for Singapore road users and impacting the way insurers underwrite risk.
“Not only are drivers who use rental cars for commercial enterprise more likely to clock up higher mileage and spend more time behind the wheel, but many are young drivers who are almost twice as likely to have an accident compared to the average driver. Both of these factors are expected to result in a higher frequency of road accidents,” Mr Bucha added.
But technology advances in the insurance industry also have the potential to reduce traffic accidents, with more insurers adopting telematics to promote safe driving. AIG's road safety survey in 2015 ound that 68% of Singapore drivers would consider installing a telematics device to pay lower car insurance premiums, while more than half of drivers believe telematics would change their driving habits for the better.
“We expect that the growing adoption of telematics devices by both insurers and drivers will reduce road risks and improve community safety, and eventually lead to a 10 per cent or greater decrease in auto insurance premiums over the next two years," Bucha noted.
The insurance industry will also brace impacts of the growing number of younger drivers buying new cars.
"The insight that some younger drivers are flouting the road rules which is leading to a rise in car accidents, shows that we need to ramp up our efforts to educate Singaporeans on road safety and incentivise them to be safer drivers," Bucha noted.
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