According to industry experts, the provision for technology-driven add-ons in motor Own Damage (OD) insurance can lead to better customisation of policies and lower premiums.
In a significant move, the Insurance Regulatory and Development Authority of India (IRDAI) has permitted general insurers to introduce tech-enabled concepts of pay as you drive, pay how you drive, and the floater policy for vehicles belonging to the same individual. These covers would be provided for two-wheelers and private cars as add-ons to the basic policy of motor OD, which according to Rakesh Jain, CEO of Reliance General Insurance, is a win-win situation created by the IRDAI.
“We, at Reliance General Insurance, introduced similar concepts of Usage and Behaviour-based motor insurance offerings through sandbox products last year. Such models are cost-effective, futuristic, and endorse good driving behaviour,’‘ he said.
The OD policy coverage, determined as per an individual’s tailored coverage, can be based on a customer’s driving behaviour patterns, general upkeep, mileage, and vehicle usage patterns to offer the best features they need.
“This will do away with the ‘standard premium for all’ practice and enable customers to avail a premium as per their usage, consumption, and other requirements,’‘ Jain added.
Adaptive
The decision of the Regulator in permitting new add-ons is in line with the changing nature of work and lifestyles in recent years.
“It is a welcome move by the Regulator, especially at a time when the pandemic has changed the way we work and travel; these add-on covers will definitely appeal to customers who are often working from home, thus making car insurance cost effective for them. Further, this will give lower-mileage drivers more transparency and control over their auto insurance,” Udayan Joshi, President – Underwriting & Reinsurance, Liberty General Insurance said.
“Liberty General Insurance has the product concept of ‘Pay as you drive’ under the regulatory sandbox and is ‘excited’ about the opportunity given by the IRDAI”, he said, adding, “The introduction of add-on covers will act as a catalyst in deepening the penetration of insurance in the country.”
The motor floater policy will enable consumers to have a single policy for their multiple vehicles, ensuring seamless renewal and single-window communication with the insurers.
Yet to pick up
“Concepts like “pay as you drive” and “pay how you drive” in motor insurance are quite popular in other markets although they are yet to take off in a big way in our country,’‘ Subramanyam Brahmajosyula, Head-Underwriting and Reinsurance, SBI General Insurance said.
“With the Regulator taking a proactive step in encouraging insurance companies to file these add-ons, customers will stand to benefit since these will bring in an element of customisation and flexibility to motor insurance together with the possibility of lower premiums,’‘ he added.
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