The insurance regulator wants non-life insurers to work on innovations/segmentation strategy, whereby motor third-party insurance premium paid by a person driving a car for only a couple of hours a week is lower than that for a person driving for 10 hours. Likewise, a person regularly going to a gym should pay less medical insurance premium.

Giving examples of some of the product ideas coming up in the market, Insurance Regulatory and Development Authority of India Chairman TS Vijayan said: “Suppose you are driving your car for one hour a week and somebody else is driving 10 hours a week. Why should these two persons pay the same premium?

“That (thought) process is coming up in the market. Because of the Internet of Things (IOT), policyholders cannot cheat. If such innovative products come in, then the regulator will definitely consider.”

Similarly, in the case of health insurance, if a person goes to gym regularly then the premium could change (be lower). “So far, nobody has come up with such innovative products. I was telling the companies, you bring the products….if innovation comes, it is good for the customer.

“If it gives a better deal to the customer, then why not look (by the company) at it,” explained the IRDAI chief on the sidelines of a FICCI Insurance Summit.

Mayank Bathwal, CEO, Aditya Birla Health Insurance Company, said his company has launched ‘Activ Health’, where policy-holders can earn up to 30 per cent premium back as a reward for their health activities — such as recording 10,000 steps a day, working out at a gym for 30 minutes, practising yoga, and so on.

Motor third-party insurance

Referring to the IRDAI’s proposal to hike motor third-party insurance by 15-50 per cent in different categories of private and commercial vehicles, Vijayan said: “We are getting varied comments. Obviously, customers are not too happy with the (proposed) hike in premium.

“However, looking at the reality of the business, the loss-making nature of the business, a hike is inevitable. In some cases, even more than this (what has been proposed) may be inevitable...Insurance is all about pooling and settlement of risk.”

Vijayan underscored that the problem with motor third-party insurance is that the claim amount keeps varying, it is not fixed.

“So, when the claim amount keeps varying, naturally premium will also change….If there is a fixed compensation, then the premium is the same,” he said.

HDFC Life, Max Life merger

To a specific question on when the IRDAI will give approval to the merger of HDFC Life and Max Life, Vijayan said it is still work-in-progress. “I cannot give a timeframe. These companies are working on the concerns that were raised.”