Sg Car Insurance = SCAM!
Forum: the Sammyboy.com's Alfresco Coffee Shop � Forum
Subject: Sg Car Insurance = SCAM!
DateTime: 12/04/2005 08:56:13
when your papaya masters have no transparency, what do you expect from salesmen
Motor premiums: More transparency needed
ABOUT four months ago, your paper reported on the dissatisfaction of
many motorists who were slapped with hefty premium increases despite
having a claims-free record. I was one of them.
At the time, the General Insurance Association (GIA) tried justifying
the hefty premium increases, although the reasons given were very
weak. For drivers like myself, who have maintained accident-free
records, the increase was unjustifiable and left us feeling cheated.
At that time, I wrote to the press and suggested that motor insurance
is actually a cash cow for insurance companies, and motorists were
being milked. If indeed the losses were as bad as GIA made it out to
be, why do insurance companies continue to compete aggressively for
the business all these years?
Recently, GIA reported that insurance companies made a profit of $10.7
million in the motor business last year. Can you believe this? Within
four short months, the insurance companies have turned the losses into
a profit of $10.7 million!
And they have done so despite repeatedly maintaining that many of the
factors are beyond their control, for example, the increases in prices
of car parts due to currency fluctuation.
Are we to believe that all the problems which the industry could not
fix for the last 10 or more years suddenly disappeared?
We do not begrudge insurance companies the right to make a profit. All
we ask for is greater transparency and a fairer method on which
insurance premium is charged.
GIA and the insurance companies owe us an explanation. And no more
Now that the insurance companies are making such a tidy profit, are
they going to refund the premiums to those who were slapped with the
If GIA and the insurance companies cannot manage their own affairs,
maybe the Monetary Authority of Singapore should step in to regulate
Patrick Tan Siong Kuan
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By: Mellanie Hewlitt
15 Jan 2005
COE, Parf, ARF - confused? Characteristics of The Great COE Scam
It is glaring that although Singapore has the world's most expensive
cars, the vast majority of car owners remain confounded by the
complicated pricing and ownership system. (See artcile from the New
Paper 14 Jan 2005 "COE, Parf, ARF - confused?")
In all developed countries, buying a car is a simple and transparent
affair that is concluded between buyer and seller. The only other
third-parties involved are the insurance company and the finance
company. In Singapore a series of bureaucratic shields and paperwork
complicate the process.
The system is massively complicated, designed to confuse the average
car buyer. The objective is to disguise the underlying scam which
involves siphoning funds from the car owner into the bloated coffers
of the government.
The latest tender saw car COE premiums ending at $18,400 (up to
1,600cc) and $14,002 (above 1,600cc) - the lowest in over a decade.
The government is set to release between 100,000 to 120,000 COEs this
year. At an average COE "price" of approx SGD16,201 per COE this
amounts to a whopping SGD1,944,120,000/- in COE revenue for the
Although the supposed objective of the COE system was to regulate
traffic flow and reduce traffic congestion, a number of
characteristic reveal the actual COE scam which has the hidden
purpose of siphoning funds from car owners.
The scam is Revealed via the following formulae:
COE Revenue = COE Price X Number of COE issued.
Regardless of the price of the COE, the total COE revenue collected
remains generally stable at approx SGD1.994 billion. This is because
any fall in price is compensated by issuance of more COEs hence
keeping the COE revenue relatively stable.
Below are some of the characteristics of the COE scam:
1) The illusion created by the Scam is that the price of the COE
flustuates as a result of demand and supply. In reality Car Owners
are actually providing a buffer for the government and ensuring a
steady COE income stream.
2) The scam also effectively encourages Car Owners to scrap perfectly
good vehicles early. 3-4 year old cars in mint condition and
purchased at very high COE prices are scrapped early when COE prices
fall. With a greater number of vehicles "retired prematurely" the
government can then issue more COEs at lower prices creating the
illusion of a COE market that is driven by demand and supply.
In the above scenario, the constant that is maintained is the COE
revenue. In a market that is truly driven by Demand and Supply, a
fall in demand will eventually lead to a fall in supply which will
translate into reduced sales reveunes.
3) It is Impossible to actually own a car in Singapore.
To ensure continuity of the COE income stream, the PAP government has
effectively made freehold car ownership in Singapore impossible. Car
Owners never actually "own" the car per say, even after spending so
much money on a piece of paper, all they actually hold is a lease
giving them a conditional revocable right to drive a car for 10 years.
At the expiration of this lease, the COE certificate is either
renewed via payment of additional fees by current owner, or (in event
the old owner chooses not to renew the lease) it is "purchased" by a
new bidder. Either ways the PAP government is assured of a never
ending income stream.
4) The scam is also revealed when a car owner attempts to scrap
prematurely. The system does not allow the car owner a cash rebate on
the balance COE. Instead, the car owner has to purchase another car
(and another COE) and deduct his COE rebates from the final purchase
price. This ruse ensures that COE money remains with the government
even when a COE is scrapped prematurely, thus assuring them of a
steady income stream, albeit at the expense of car owners.
5) This ruse has been used successfully for over a decade in
conjunction with a series of other hidden "taxes" (like the ERP, CPF,
GST etc) all designed to provide a cheap and ready source of revenue
for undisclosed government activities.
6) The scam is given a veil of legitimacy with the support of laws
and regulations. The local government owned media regularly report
that the COE system "is tightly regulated and very competitive".
7) A plethora of technical terms are used also add layers to the scam
and hide the underlying ruse. Terms like "COE", "PARF", "ARF", "OMV"
The COE scam also works in conjunction with other scams and is part
of a more elaborate process. On top of the COE, car owners also have
to pay Road Tax (which is reasonable) and also ERP (Electronic Road
Pricing) which imposes a further cost for road usage.
So Car owners are penalized not just for leasing a car but also for
the road usage.
8) Other countries like Hong Kong also successfully control traffic
and the COE concept is conspicuously absent from these countries. In
fact in Hong Kong although there is a high cost to owning a car, this
is contained in the parking fees and charges which are paid to
landlords. The main difference here is that the parking fees are
collected by land lords and channeled back into the private sector.
In Singapore the COE revenues totaling SGD2 billion are channeled
directly into government coffers. No one knows what happens to this
massive amount of money.
9) How does the government justify the existence of such a system in
the first place? After years of implementation, the original
objective of the system (which was to control traffic congestion) has
long since been lost. Traffic jams are a common occurence all over
the island especially during peak hours and even the implementation
of additional penalties like the ERP have failed to address this
So what exactly are Singaporeans paying for when there is no concrete
proof for justification of the system? Such an obvious scam would
have risen many questioning eyebrows in other developed nations. But
here in Singapore part of the reason for the success in the deceit
lies in the social political circumstances which are unique only to
There is basically no accountability in government administration and
the political system effectively discourages any calls for
clarifications. Law suites are used as a convenient tool to silence
political opposition members and the international press.
After decades of indoctrination, local citizens have adopted a spirit
of apathy and unquestioning obedience to any enforced regulations and
policies. Indeed the government scammers are sound very legitimate.
They are usually polite, friendly, personable, sincere, convincing,
and controlling; formidable foes for more trusting average Car Owner.
10) Social and Psychological Indoctrination are important tools in
the scammers arsenal. In Singapore, a car has been portrayed by the
government as a "luxury item" in order to justify its high price.
On the other hand, government policies place immense pressure on
families to reproduce and more than one child. This, coupled with
uncertain employment (and high unemployment rates of 4.50% p.a.) have
necessitated dual income families with both spouses working long 12
hour work days. The hectic lifestyle and multiple roles of both
spouses (as wage earner, parents and care-takers of their own
parents) have rendered a car a very necessary asset.
11) Whilst the average con artist and scammer can be reported to the
authorities, how does one seek recourse when the local authorities
themselves are part of the elaborate hoax? The picture remains bleak
for Singaporeans as there seems no way out for them from this system.
12) According to a BBC article, not all scams are illegal by
definition. In fact some software scams are perfectly
legal. "Unscrupulous software suppliers have been taking advantage of
software license agreements to trick customers out of anything from
�10,000 to �100,000 plus. There is nothing illegal about it - some
of the world's largest software companies have been doing it to some
of the biggest companies in the world."
The COE scam falls within this special category.
COE, Parf, ARF - confused?
You're not alone. Most people we polled are too
By Amit Jain
SINGAPOREANS know the price of cars and spend a fortune on them.
But when it comes to the details of buying or owning a car here, many
know next to nothing.
A recent study showed about one in nine people here owns a car, and
only a fraction of them seem to know all about additional
registration fee (ARF), preferential additional registration fee
(Parf), or certificate of entitlement (COE).
A random poll of 100 car owners by The New Paper revealed that most
knew little more than how to go to a car showroom and select a model.
They are happy to leave everything else to the dealers.
For example, about eight out of 10 drivers we polled had no clue how
much their cars were worth or why they had to pay a certain amount of
insurance every year.
About three quarters of respondents also did not know what Parf means
or how the COE system works. (See 'POLL RESULTS' below.)
And the question that takes the cake: What is a log card? About three
in 10 did not know that cars come with an 'ownership title', known as
the log card.
They do not often get to see the log card, which is retained by the
finance company they take loans from.
And since they are given only photocopies of it, they assume it is
nothing more than a 'receipt' of the transaction.
Most of those we polled were professionals and business executives
aged 25 to 40.
In comparison, most of them were quite well-informed about property
transactions. They knew, at least roughly, the value of their homes
and the mechanics of buying or selling property.
So, what is it about cars that keeps many owners poorly informed?
One car owner, senior advertising executive Robin Nayak, 39,
said: 'It is up to the dealer, not me, to know.'
Like him, other owners also feel that getting information about cars
can be on a 'need to know' basis - check only when the time comes,
such as when you want to buy or sell a car.
Marketing executive Margaret Foo, 40, said: 'I would get the value by
going to the dealer, finding out how much they are selling their used
cars for, and benchmark from there.'
Motoring analyst Justin Lee, 40, noted that the average car owner has
two things in mind - cost and affordability.
'They do not consider it worth their while to know any more,' he said.
Mr Alex Teo, 33, managing director of Motorcars.com.sg agreed.
'Most people can't be bothered,' he said. 'After having set aside a
fortune for their cars, the owners come to expect that whoever has
sold them the vehicles will settle matters on their behalf.
'They are keen to know only what their down payment and monthly
But if you are a car owner, should you be concerned?
Opinion is divided about how much motorists need to know about their
Mr Teo said: 'It is necessary for the car owner to know what he is
getting into, especially if he is buying, selling or trading-in a
'Although there are fewer cases of fraud these days, car owners can
leave themselves open to price manipulation if they are ignorant.'
But Mr Lee thinks otherwise.
'Singapore is a regulated market and most car agencies are fairly
reputable. Moreover, the value of your car is pegged to its age and
anyone can calculate it.'
Mr Simon Hulber, 40, publisher of the Highway motoring magazine,
said: 'I think the survey results reflect the way the car industry
functions in Singapore.
'It is tightly regulated and very competitive. So most car owners do
not see the need to know any more than they should.' - Additional
reporting by Emilyn Ng and Jaclyn Lim
DO YOU KNOW THE ANSWERS?
Do you know what is Parf?
No: 65 per cent
Yes: 35 per cent
Answer: It is the preferential additional registration fee
certificate that you get as a rebate when you de-register a used car.
It is also known as the scrap value certificate. You can find the
scrap value of your car online by visiting www.onemotoring.com.sg and
keying in your IC number and the car's licence plate number.
Do you know how your insurance premium is calculated?
No: 78 per cent
Yes: 22 per cent
Answer: It's based on a variety of factors, such as market value, no-
claim discount and whether you have committed a traffic offence.
Do you know what is the most important document to you, as a car
No: 30 per cent
Yes: 70 per cent
Answer: The vehicle's log card - an ownership document which also
contains technical and other details about the car.
Do you know how to bid for COE?
No: 72 per cent
Yes: 28 per cent
Answer: For three days, usually beginning on the first and third
Mondays of each month, bids can be submitted using DBS/POSB ATMs,
Internet banking with Citibank and UOB, and phone banking with
Citibank and OCBC.
If you scrap your car today, do you know how much value you will get
No: 80 per cent
Yes: 20 per cent
Answer: You can do a rough calculation by using the following
formula: Value of the car = (The COE paid on the car) x (the number
of years still left for use/10) + Parf rebate. The Parf rebate value
can be obtained by visiting the www.onemotoring.com.sg and keying in
your IC number and the car licence plate number.
Comments: Mellanie Hewlitt
24 Dec 2004
The obsolesces rate of valuable assets in Singapore is extremely
it is conceivable that certain products like computers have short
due to rapid technological progress and changing consumer needs, it
another matter to find this unhealthy trend in "longer term" assets
house or cars.
A car that usually would cost only SGD30,000/- with an average life-
span of 20-
30 years is only given a shelf life of 10 years on paper (COE). In
developed countries, it is not unusual to see a 1965 Beetle (or cars
15 years of age) rumbling along the roads as these vehicles are still
perfectly good and road worthy condition and are testimony to the
feats of their makers.
But in Singapore, the COE system effectively encourages owners to
perfectly functional cars and replace these with newer models. Of
only beneficiaries are the government (who rake in the proceeds from
bids) and also car dealers.
In reality, one never really owns a car in Singapore. One only
right to lease the vehicle from the government for 10 years. And the
the cake is that car prices in Singapore are the highest in the
typical 1.6 liter Japanese car can cost SGD85,000/-. No two guesses
where the proceeds go.
The same applies also to 99 year leasehold property and HDB flats. On
of these periods, "owners" have to fork out additional cash upfront
the right to the asset. This inefficient and highly expensive system
resulted in tremendous wastage and additional costs for the average
especially since housing and cars will be the 2 most expensive items
High Obsolesces Rates of Valuable Assets Lead To Wastage & High Costs
70 to 80 per cent of the 82,000 care that were deregistered last year
than five years old, and more than 90 per cent are less than 10 years
A home and a car will top the list of big ticket expenses for most
Singaporeans. And these same items have limited life-spans......
Dec 24, 2004
2004 set to be another record year for scrapped cars
by Christopher Tan
DESPITE measures to discourage the early scrapping of cars, the
vehicles deregistered will reach a record level again this year.
It is estimated that by year-end, up to 115,000 vehicles will have
off the road, up from the 109,710 recorded by the Land Transport
year. The estimate is based on the more than 105,000 vehicles
the last 11 months, a monthly average of about 9,600.
Cars would make up 74 per cent of them, a tad above last year's 73
The sizeable exodus has been a yearly phenomenon since the late
of the tax rebates owners get when they send their cars to the
scrapyard or for
As prices of cars decline with falling taxes and certificate of
(COE) premiums, rebates are often higher than what owners could get
The Government has taken steps to curtail the premature scrapping, as
it is a
drain on the country's foreign exchange earnings. It changed the
in early 2002 to make it less generous.
But industry players say the trend will take time to reverse. The
the Automotive Importers and Exporters Association, Mr Neo Nam Heng,
trend to continue for some time, noting that 2002 and 2003 cars are
'In my yard, there are at least 50 2002 cars, mainly Lexus,' Mr Neo
adding that the lower COE results released this week will 'accelerate
Four export-processing zones - yards to hold vehicles before they are
out - were set up last year. Two more operators were appointed two
months ago to
handle the growing number of scrapped cars.
But Transport Minister Yeo Cheow Tong expects more people to keep
their cars for
10 years, with the new scrap rebate formula. Pegged to the additional
registration fee (ARF), the rebate will shrink as the ARF is trimmed.
The Government will be gradually reducing the ARF. Mr Yeo last month
will continue to review the upfront taxes to make car prices more
Date: Tue Jan 13, 2004 12:00 am
Subject: The Great COE Scam
We circulate below letter from Concerned Reader.
From: Concerned Reader
Date: Tue, 13 Jan 2004 12:51:06 +0800
You have the knack for stating the obvious. It is no secret that the
reason used to impose COEs (i.e. to restrict traffic and control
bogus. Any person can come up with 10 different schemes of rationing
roads without imposing sky-high COEs.
Indeed, the entire world is aware that the ONLY reason for existence
COEs is to get revenue from car owners.
What is less obvious is the huge amount of money that goes into the
coffers every year. Taking the below statistics from the Shitty Times
rough yardstick, if 82,000 cars per year were prematurely retired,
be new replacement COEs of equivalent number.
At an average rate of SGD23,000/- per COE, 82,000 COEs will bring in
estimated SGD1.886 billion per year. This is in addition to the daily
road tax rates that the government imposes. Let me put this figure in
perspective; SGD1.886 billion is;
1) SGD1,886,000,000; or
2) One Thousand Eight Hundred and Eighty-Six Million Sing Dollars.
And no one has a clue what happens to this humongous sum. Where does
it all go?
How is it utilised? Does the LTA spend SGD2 billion a year upgrading
Please do not tell me that the money went into the half-baked half f%$
of contraption that is the NEL. That's another joke of the year.
Its clears as daylight that Singaporeans are taken for a very
And the even more amusing fact is that no one even raises this as an
be addressed. People still flock to buy cars by the hundreds!!! Call
mentality (or monkey see monkey do).
Given that a car tops the list (after a house) as the biggest ticket
the average Singaporeans lists of expenses, this also says alot about
apathy permeating Singapore's less then inquiring populace. But then
this is Singapore......
Just my two cents worth.
From a "Concerned Reader"
Below are extracts from "Singapore National Education Part 68" which
illuminates the wonderful Singapore COE system in practise.
"9. That because of a freak $101 COE for the month of July, people
COEs to extend their 7 to 10 year old cars for another 10 years.
Based on the
three-month moving average of the COE, a person owning an 10 year old
renew his car for about $18,000, instead of the usual $30,000+.
But because of the present low COE prices compared to say, 2 years
because of the poor market sentiment post-Sept 11, many Mercedes
Lexuses (Lexii?) bought with high COEs of the past are now being
is because these big almost-new cars can fetch better values from
deregistration (thus realising the rebates from the unused portions
residual taxes) than from a second-hand sale.
From the BT Motoring section:
"According to the Land Transport Authority, 50,392 vehicles were
in the first eight months of 2001, of which 32,508 were cars. Of
were big cars (above 1,600cc). The figures are already higher than
previous full-year numbers. And extrapolated over 12 months,
likely to hit 75,588 vehicles or 48,762 cars. Of these, 17,343 would
So, as a result of our wonderful COE system, ten-years-or-older cars
emission engines are being kept on the road, while high-tech two-year-
luxury cars are being scrapped.
Renew your old car, scrap your new one. Only in Singapore."
--- End forwarded message ---