Creation of central database will boost motor insurance, say industry players

Of every 100 vehicles plying on Indian roads, 60 are uninsured. While a majority of these are two-wheelers, some commercial vehicles too form part the uninsured list.

This could, however, change over the next couple of years with the creation of an integrated database on vehicle insurance details.

Currently, general insurance companies upload data of insured vehicles on ‘VAHAN’ on a pilot basis.

Once the process of such data upload is complete, it will be easy to start checks for uninsured vehicles, thus improving penetration of motor insurance.

‘VAHAN’ is the national vehicle registry website containing data listed with all the Road Transport Authorities in the country. Auto-makers upload vehicle information like chassis and engine numbers. and other manufacturing details.

However, since 2016, some general insurance companies like National Insurance Company (NIC) and Bajaj Allianz, have started uploading details of vehicles insured on ‘VAHAN’.

“A majority of two-wheelers and some commercial vehicles do not renew their cover in the subsequent years. Once this database is created, the authorities will come to know which vehicles have not taken an insurance cover or have not renewed it,” K Sanath Kumar, CMD, NIC, told BusinessLine .

Motor insurance business currently accounts for nearly 40 per cent (or close to ₹50,000 crore) of the total general insurance industry.

“The segment can grow manifold once the data of uninsured vehicles is made available,” Kumar said.

Insurance, particularly third party, is mandatory for every vehicle so as to avoid liability to mishap victims.

However, the percentage of insured two-wheelers tends to go down second year onwards and retention drops to 45 per cent. This means that out of every 100 two-wheelers insured in a year, only 45 come up for renewal the next year.

The common pool will also help insurance companies calculate premium at the time of renewal.

Currently, when a vehicle previously insured by a different company comes up for renewal, the insurer has to depend on self-declaration by the customer on the issue of no claims. Accordingly, no-claim bonuses are calculated.

“The customer may sometimes take advantage of this and not provide correct information. Once this database is ready we will have access to all such information on a common portal,” a senior industry executive said.

The central database, once ready, can also be accessed by government authorities to take necessary risk-mitigation measures at the time of third-party claims, said KV Dipu, Head of Operations and Customer Care, Bajaj Allianz General Insurance.

“Like Aadhaar is set to revolutionise customer data, this central pool could bring all uninsured vehicles on a single platform,” Dipu said.

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