The Hindu Business Line : Vehicle buyers seek ‘premium’ advice

Coimbatore, July 17 Visualise this: You have decided to buy a car. Say you have made up your mind on the make, colour and model. The next step you will probably take is get a quote from a dealer or two in the vicinity, compare the offer/freebies and approach a bank for finance support.

Here again, you will compare the rate or EMI before submitting your papers for getting a legal sanction of the loan. Thereafter, you leave it to the dealer to insure and register the vehicle before delivering the same at your doorstep. Right?

But when Mr Sekar, a businessman, decided to take a Skoda, he not only compared the EMI dues (to the bank), but also sought the help of an insurance broker to get him the best premium. “In the detariffed scenario, every company has started to offer a huge discount. To get the best rate, I approached an insurance broker,” he said

The broker got Mr Sekar the quotation from five insurance companies — Oriental Insurance, Bajaj Allianz General, Cholamandalam MS General Insurance, IFFCO-Tokio and ICICI Lombard. While ICICI Lombard quoted a final premium of Rs 38,073, the others stuck to a premium of Rs 43,880 on the vehicle, whose declared value was Rs 15.46 lakh. Mr Sekar chose the ICICI offer.

Offer analysis

A closer look at the quotation from the various companies revealed that the own damage premium, basic third party cover and personal accident cover were the same across these companies. ICICI offered the maximum discount of Rs 20,673 compared to Rs 15,504 by the other four players.

Asked about the huge difference in the motor vehicle premium rates, the Head of Pioneer Insurance & Reinsurance Brokers Pvt Ltd, Mr C. Kumar, said the general insurance companies were offering discounts which ranged between 10 and 30 per cent for private cars. “But one has to demand to get the best offer,” he said.

Unaware of offers

With most vehicle buyers preferring to allow the dealer complete all the formalities, such as insurance and registration, customers rarely get to know about such discount offers.

Mr Mohan Kumar, Managing Director of Link-K Insurance Broker Company (P) Ltd, said it is the job of a broker to get the best rate for his clients. To a query on discount, he said, “There is a whole range such as volume discount, good feature discount and the like.”

Industry insiders say that insurance companies have not streamlined or codified the discount, but follow the same yardstick in arriving at the ‘good feature’ discount.

Interesting yardstick

The yardstick, though not publicised or put in the public domain, is interesting.

“The insurer captures all details about the vehicle owner, his vehicle usage pattern, commuting within the city or use for long distance travel, the driver’s background, age, driving experience, past claims experience, the type of vehicle and the client relationship with the company,” Mr Kumar explained.

The good feature discount is extended only to private cars and in the case of a new vehicle, is taken into consideration only from the second year. But not many are in the know about this. At this point in time, it looks like an ‘on-demand’ offering.