To keep pace with the new developments in the insurance market, the Insurance Regulatory and Development Authority of India (Irdai) allowed general insurers to offer Pay As You Drive, Pay How You Drive and Floater policies for vehicles of the same individual owner Is. Two wheelers and private cars as an add-on to a motor insurance policy. These tech-enabled concepts can be sold on an annual basis for Motor Own Damage (OD) cover.
Regulator, IRDA said, “The introduction of the above options will help in providing much needed impetus to motor own damage cover and increase its penetration in the country.”
Earlier, the regulator had approved these product offerings of insurance companies under regulatory sandbox guidelines. The objective of the regulator behind promoting such products under the regulatory sandbox route was to identify innovative ideas to spur growth in the insurance sector as well as provide flexibility in dealing with regulatory requirements and ensure policyholder safety. These covers are commonly known as need-based insurance.
Naval Goel, Founder and CEO, PolicyX.com, said, “It is now an official product. Hence it does not have the applicable limitations on sandbox products. The sandbox was provided to insurers to launch products without approval but to a limited audience. There was an innovation opportunity.”
Goyal further added, “These three new add-ons will be offered as optional riders with the base Motor Own Damage (OD) policy and can be opted for based on the coverage opted by the policyholder. Through these, the customer Will be able to manage insurance policies of their multiple vehicles better and have affordable premiums as they will pay according to the way they use and drive their vehicles.Good driving patterns if a customer drives thoughtfully Riders like ‘pay how you drive’ charge a lower premium for promotion.”
In the post-Covid scenario, many customers do not drive regularly and still pay the same annual premium depending on the make or model of their vehicle. Ashwini Dubey, Head of Motor Insurance Renewals, Policybazaar.com, said that now the new IRDAI guidelines will benefit customers and have better control over the upfront insurance cost as the premium will be based on the kilometers driven by the vehicle. This is a win-win for those customers who have more than one car or do not drive much. For example, if person A drives his car 200-300 km per month and person B drives his car 1200-1500 km per month, they will not pay the same premium under the ‘pay-as-you-drive’ model. have to do. He added, “It is also good for insurers to identify their liabilities, the person who drives their car more often is more prone to the risk of accidents and is more likely to have an insurance claim than the one who drives less “
Adding to this, TA Ramalingam, Chief Technical Officer, Bajaj Allianz General Insurance said that the insured can also buy an add-on motor cover on a floater basis for multiple vehicles, be it a four wheeler or a two wheeler. The purpose of such cover is to make motor insurance essentially more affordable, especially for customers who primarily opt for third-party covers only and ignore the benefits of OD covers. Ramalingam said, “An initiative like this is a step in the right direction in increasing the much needed penetration of motor insurance in India.”