The Hindu Business Line : Bajaj Allianz General geared for prompt action on motor claims

INSURERS prefer bulk customers. This ensures large volumes; and a substantial saving on transaction costs. For life insurance, the industry average for commissions paid to agents is 25 per cent of the first year's premium. Comparable figures are not readily available for non-life insurance, but we do know that public sector non-life insurers paid out Rs 1,100 crore as commission in 2003-4, up from Rs 657 crore in 2001-2; perhaps indicating a struggle to survive in an increasingly competitive market.

Since few people change their insurance providers unless there are strong reasons to do so, the focus is on nabbing business from the word go. Thereafter customers either authorise monthly deductions from their salary, or mechanically pay annual premiums each time they receive a reminder.

In keeping with this trend, Bajaj Allianz General prefers to catch motor vehicle owners at the choke point: It strikes a deal with Maruti dealers to give the first year's insurance free. But, as we shall see, there are some important differences between this company and most other insurers. As a general rule of thumb, it is only after you make a claim, and the insurer has whittled it down to a small fraction that you realise that changing your insurance provider would have been a good idea.

Does this mean that you can only take action after it is too late? Not really. There are ways through which you can prevent or mitigate risk.

For example, you must be wary of insurers who cover your property without independently assessing its value. For this only means that they prefer to do this later, when the time comes to settle. This is especially important for house insurance:

Independent evaluation allows you to know beforehand the risk factors that the insurer might like to take into account; either while setting the premium, or, if you are unlucky, while settling the claim. Like your house being located near a timber depot, for instance, or an LPG dealer.

Similarly, beware of life insurers who do not warn you that, unless you are suitably or sufficiently covered, most of the proceeds will go towards meeting end-of-life hospital expenses; leaving little or nothing for your survivors.

And above all, beware of fine print. A typical house insurance policy can run into 11 pages, printed in letters smaller than those used for this story, and containing all sorts of clauses, which you would be unable to comprehend even if you chose to plunge into the gobbledygook. Much like marriage and divorce in fact, of which it has been said that, `marital law as it presently stands does not allow those getting married to decide on the terms of their "marital contract". Once they marry, "they are bound by laws of which they will remain largely unaware until the marriage breaks down."'

Bajaj Allianz, however, is an exception. Their motor vehicle insurance policy, issued (and annually renewed) by Maruti dealers on its behalf has done away with fine print altogether. And contains only six pages. The reverse of the policy certificate prominently carries a list of do's and don'ts. What to do if the car meets with an accident?

Inform any Maruti dealer via the helpline as soon as possible. If you are unable to make contact from the site of the accident, park and lock the car, and then head for the nearest phone.

What to do if there is any injury and/or property damage to a third party?

Lodge a FIR with the nearest police authorities and obtain a copy, provide a photocopy of your policy to the third party, do not compensate the third party on the spot, and inform any Maruti dealer.