On Wednesday, India’s Insurance Regulatory Development Authority (IRDAI) allowed non-life insurers to introduce a new technology-enabled concept called “pay when driving,” “pay for how to drive,” and floater covers for multiple vehicles. Did. Part of a car insurance package..
The new concept will give vehicle owners access to driving behavior patterns, general maintenance of the vehicle, mileage, vehicle usage patterns, and lower vehicle insurance policies.
What do they mean?
Pay while driving: Customers have to pay according to usage. This cover can be defined according to the customer’s approximate declaration of planned usage for the cover year and can be tracked using technical support (a geotagged app). However, the insurer also needs to clarify the process of resolving claims if the customer exceeds the declared usage.
Pay how to drive: Traditionally, customers receive a discount if they do not report a claim in the year of coverage. Customers can now choose live tracking of driving behavior in terms of speed and usage. This can be used by insurers to provide their customers with better or more dynamic pricing from a premium perspective. Customers will be provided with technical tools or devices for insurance companies to track this behavior.
Floater cover: As with floater insurance for health insurance, IRDAI gives customers the flexibility to cover all vehicles with one if each customer owns multiple vehicles (two-wheeled or four-wheeled). I suggested that I could provide sex. policy. “This also helps our customers with attractive pricing and convenience in setting one policy for multiple vehicles,” said Supriya Ratsi, Whole Time Director of Anand Rathi Insurance Brokers. increase.
What role does technology play?
These products require telematics, a combination of telematics and informatics used to track driving-related data, such as the storage and transfer of information. Telematics utilizes devices that help track driving habits. Devices whose policies include installations allow customers and insurance companies to monitor their driving habits. These monitoring tools can also improve the traffic safety of customers and other vehicles. In addition, such data can be used by insurers to recommend better plans that provide comprehensive coverage depending on usage. Rakesh Jain, CEO of Reliance General Insurance, said:
What are the benefits to our customers?
Currently, there is no user behavior-based pricing for insurance premiums, so motor cover prices are flat. The new concept improves the cost-effectiveness of low utilization customers, especially those who drive less than 10,000 km per year, and the safe and efficient use of vehicles.
“On the contrary, such a move could eliminate the cross subsidization currently enjoyed by high-utilization customers and could result in slightly higher premiums for this set. PolicyBoss.com (Landmark Insurance Brokers) ) Founder and MD, Susheel Tejuja, said:
In addition, car insurance is basically affordable. This is especially true for customers who primarily choose only third-party compensation and overlook the benefits of their own damages (OD) compensation. These initiatives are the impetus for promoting the spread of car insurance in India. This allows drivers with short mileage to increase the transparency and manageability of their car insurance.
When are the changes planned?
Some insurers have already devised such products based on new concepts through the regulated sandbox route. “We are excited about the opportunity to test the product concept of” pay while driving “under a regulated sandbox. In addition, the introduction of such add-on covers will be an opportunity to deepen the penetration of domestic insurance, “said Udayan Joshi, President of Liberty General Insurance’s underwriting and reinsurance.
“Insurers plan to launch new products in the coming weeks, but vehicle users are expected to take some time to understand these schemes,” insurance officials said.
IRDAI said the concept of car insurance is constantly evolving. “With the advent of technology, insurers have created a constant pace to meet the interesting but challenging demands of millennials. The general insurance sector needs to meet and adapt to the changing needs of policyholders. There is, “says IRDAI.
What if an insurance company faces a claim that is higher than the mobilized premium?
Insurance officials say the new concept cannot affect underwriting losses (claims higher than mobilized premiums). Non-life insurer underwriting losses were Rs 20,039 in 2020-21, down 15.52% year-on-year. According to data from the Comprehensive Insurance Council, insurers have mobilized a total of 70,432 rupees in the automotive category for the year ended March 2022. This is an increase of 3.98%.
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