The concept of Motor Insurance is constantly evolving. The advent of technology has created a relentless pace for the insurance fraternity to rise up to interesting yet challenging demands of the millennials. The general insurance sector needs to keep pace with and adapt to the changing needs of the policyholders, said the IRDAI on Wednesday.
Hyderabad:
In a move that will help bringing down the motor insurance premium for the customers, the insurance regulator IRDAI, as part of its product innovation drive, has now allowed general insurers to offer telematics add-ons like “Pay as You Drive'', Pay How You Drive” and “Floater policy for vehicles belonging to the same individual owner for two wheelers and private cars” in the Motor Own Damage (OD) covers.
Earlier, IRDAI had permitted experimentation of “Pay as You Drive” to a few insurers like ICICI Lombard General Insurance under its Regulatory Sandbox programme.
The concept of Motor Insurance is constantly evolving. The advent of technology has created a relentless pace for the insurance fraternity to rise up to interesting yet challenging demands of the millennials. The general insurance sector needs to keep pace with and adapt to the changing needs of the policyholders, said the IRDAI on Wednesday.
In its perpetual endeavor to protect the interest of the policyholders and increase the insurance penetration in India, the has been seeking to facilitate the industry to move with the times. The Introduction of the above options will aid in giving the much needed fillip to Motor OD Insurance in the country and increase its penetration, said the regulator.
Earlier, the IRDAI had allowed general insurance companies “Use & File’ procedures enabling them to introduce products without seeking prior approval from the regulator, in what is the first major reform by the new IRDA chairman Debasish Panda.
Sanjay Datta, Chief, Underwriting and Claims, ICICI Lombard General Insurance,
“This long-awaited advancement by the IRDAI is a welcome move and a transformational development in the motor insurance category. In the course of the digitalisation of the insurance ecosystem, the add-on variants “pay as you drive”, “pay how you drive” and “same owner floater” policies for two-wheelers and four-wheelers are a major leap and will enable a utility-based cover to the generic motor insurance products. This historic move by the IRDAI will allow insurers to get into smaller parts of the market and give a boost to utility-based insurance purchases and will also encourages safe driving habits.”
Animesh Das, senior director – Motor Underwriting, ACKO, said “The new norms announced by IRDAI, ‘Pay as you drive’ will make way for a more customised pricing structure for motor insurance customers. Currently, customers are classified into a single category and are priced the same, irrespective of the driving behavior and usage. With the proposed add-ons, the one-size-fits-all pricing will be tweaked according to a customer’s circumstances, usage, driving behavior and habits.”
“We believe in leveraging disruptive technologies to enhance customer experience. For instance, with geo-tagging, we track the customer’s circumstances and service them as per their unique requirements. We believe the move will add value, ease hassles, decrease the pricing burden on customers, and allow them to extract the most out of policies,” he added.
While the structure of the product and coverage would be available post the insurers introduce the same in the market, conceptually, these covers would be a great benefit to the customers. Through these add on covers, IRDAI has introduced ‘Behaviour-based Pricing’ apart from the existing ‘Risk-Based pricing’ in motor Insurance.This is a welcome step by IRDAI to facilitate customer-centricity by integrating the latest technological tools, said, said Supriya Rathi- Whole Time Director, Anand Rathi Insurance Brokers.
• By opting for ‘Pay as you drive’ cover, the customer would be required to pay as per his or her usage. This cover may be defined as per the approximate declaration of the customer in terms of planned usage in the `Cover Year’ and can be tracked using technological support viz. an app with geo tagging. However, the Insurers would also have to clarify the process of settling a claim in event of the customer exceeding the declared usage.
• Pay How you Drive:- Conventionally, customers get a discount in the event of not reporting any claim in a coverage year. Now the customer may opt for live tracking of their driving behaviour in terms of speed, Usage etc. which can be utilised by the insurer to provide the customer with better or dynamic pricing in terms of premium. The customer may be provided with a technological tool or device to track the said behaviour by the insurer.
• Floater Cover: – As in the case of floater policies in health insurance, IRDAI has now proposed that in case the Individual customer owns more than one vehicle (Two wheeler or Four Wheeler), Insurers may provide the customers, the flexibility to cover all their vehicles under one policy. This may also facilitate the customer with attractive pricing and convenience in terms of having one policy for multiple vehicles.
ICICI Lombard General Insurance had spelt out following features of its `Pay as You Drive’ motor policy which was earlier experimented by the company under Regulatory Sandbox initiative:
-A customer picks a plan, which will be valid for a year, depending on the kilometres you cover; up to 3000, 5000 & 7500 Km.
-ICICI Lombard General Insurance will provide you with the telematics device and we’ll even take care of the installation.
-The customer can customise your plan with your choice of add-on covers.
-He or she can even track your usage, remaining balance and more on the telematics device app.
-The insurer send you timely reminders to top-up your plan.
-If the customer exhausts his balance, he or she can easily get a top-up by calling company’s toll free number
-The customer can also renew your plan within the policy period if you exhaust your balance.