Insurance companies to soon offer analytics-based insurance to vehicle owners that includes ‘like policies’pay as you drive‘, And ‘pay how you driveWherein the premium varies according to the driving behavior of the individual. Apart from this, insurance companies have also been allowed to issue ‘issues’.floater policy‘ for multiple vehicles of the same owner.
“As a step towards facilitating technology-enabled covers, IRDAI The Insurance Regulatory and Development Authority of India (IRDAI) has allowed general insurance companies to introduce tech-enabled concepts for Motor Own Damage (OD) cover, in a statement. According to the regulator, the advent of technology has created a relentless impetus for the insurance fraternity to meet the interesting but challenging demands of the millennials.
The insurance regulator has introduced these add-ons to increase the reach of Own Damage (OD) insurance cover in the country. As of now, most of the customers are willing to opt for only third-party covers which are mandatory, and ignore the benefits of OD cover.
How does it work, and how will it affect buyers?
The ‘Pay As You Drive’ add-on will allow customers to pay premiums based on their usage. Vehicles that spend more time on the road may attract higher premiums than less used vehicles. This will be beneficial for car owners who travel by public transport and use their vehicles on weekends. If you drive less, your premium will be lower.
The ‘pay as you drive’ add-on will depend on the driving behavior of the owner. Vehicles with higher fines and accidents will have to pay higher premiums. Your driving telematics can be collected through the vehicle’s GPS system, and you will be billed accordingly. If a buyer drives their vehicle in a hurry, they will have to pay a higher premium as the risk associated with it will be higher.
A ‘floater policy’ will allow vehicle owners to have a single policy for multiple vehicles, including two-wheelers, instead of purchasing separate policies. Hence, it will benefit those who have both a car and a two-wheeler at home.
Insurance companies welcome the move
“With the new add-on permits, self-harm policy coverage can now be tailored based on the customer’s driving behavior pattern, general maintenance, mileage and vehicle usage pattern to provide them with the best facilities. Standard premium will eliminate the ‘all’ exercise,” said Rakesh Jain, chief executive, Reliance General Insurance.
With regard to “Pay as You Drive” and “Pay How You Drive”, the introduction of such covers will lead the customers to a utility based “Pay as you use” model, providing greater flexibility and convenience in customer choice . Currently, there is price parity due to the lack of user behavior based pricing of insurance premiums, which will change. This will make it cost effective for low usage customers esp. Those who drive less than 10,000 km a year. On the other hand, such a move would eliminate the cross subsidy currently availed by high usage customers, which may result in a slightly higher premium for this set, said Sushil Tejuja, Principal Officer, Founder & Managing Director – Policyboss.com Com (Landmark Insurance Brokers) said. ,
Meanwhile, Edelweiss General Insurance recently launched the country’s first telematics-based motor insurance It’s called a ‘switch’. This on-demand policy generates real-time driving scores and rates premiums dynamically. Moreover, it also detects motion and automatically activates the insurance when the vehicle is in motion, making it convenient and hassle-free for the users.
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