THE American experience with no-fault motor insurance has largely been poor, delegates at the Asian Motor Insurance and Claims Management Conference in Singapore were told yesterday.

That is why only 11 out of the 50 American states now practise it, down by half since the early 1970s, when this form of insurance was introduced there, said Mr Paul Wilson, regional vice-president of claims at AIU South-east Asia.

A no-fault system calls for motorists to claim against their own insurer in an accident - whether or not they are at fault.

In principle, the system is supposed to minimise disputes, speed up payouts and lead to lower premiums. In practice, it has not always worked this way, said Mr Wilson, a 23-year industry veteran.

The 170 delegates from 50 countries were also told that Singapore was considering this form of insurance. It is one option the industry is exploring to improve profitability amid motorists' outcry over rising premiums.

Mr Wilson noted at the two-day conference that three out of the five American states with the highest average premiums - New Jersey, New York and Florida - practise no-fault insurance. But Washington, DC, which logs the costliest average premium - US$2,328 (S$3,240), does not practise no-fault.

Colorado's experience is an indictment of no-fault insurance. When the system was repealed there in 2003 after 29 years, premiums fell by 35 per cent over the next five years, Mr Wilson noted.

This was because the scheme had become 'too complex and too costly'. Independent doctors were called in to review accident injuries, rehabilitation centres were set up and nurses were visiting the homes of the injured, he said. The result: Medical costs soared.

Mr Wilson cited Michigan as the only big state that has made a success of the no-fault scheme. There, the average motor car premium is around US$1,800. Nationwide, it ranks 13th.

'Michigan's example is extremely effective, low-cost, consumer-friendly. It was union-driven, because the Big Three US carmakers are there,' he said, referring to General Motors, Ford and Chrysler.

Contrary to belief, fraud and disputes can arise in a no-fault regime, and Michigan has kept this in check with tough anti-fraud laws, he said.

Mr Wilson said a 'targeted, limited, no-fault system' could work in Singapore, but the laws have to be airtight and the system has to be transparent.

He added that Singapore should learn from Colorado's mistakes. 'Get everyone on board, don't go into it blindly,' he suggested.

Another insurance industry speaker, Mr Michael Lee, presented a case study on the no-fault system in New York, where the average premium, at US$2,166, is the United States' fourth costliest.

Mr Lee is the director of the International Centre for Dispute Resolution (Singapore), a branch of the non-profit American Arbitration Association (AAA). He said New York forestalls the long-drawn and costly route to litigation by making conciliation mandatory. Half the claims disputes are resolved at this stage.

If conciliation fails, the parties go for arbitration, which is where the AAA comes in. Because it is not profit- oriented, it 'focuses just on doing what's right', he said.

Mr Lee cited the time-saving benefits of this system: About 30 days for conciliation, compared to about 120 days for arbitration, and around 720 days for litigation.

In the first six months of this year, the average motor car premium in Singapore rose 25 per cent, compared to the figure in the same period last year. It is now more than $1,100.

The Monetary Authority of Singapore's (MAS) executive director, Mr Low Kwok Mun, said Singapore will carefully examine the no-fault regime as adopting it will mean overhauling the current system.

He said MAS had not received any concrete proposals from the Consumers Association of Singapore, which is spearheading the no-fault study.