Consumer digital behaviour could decide premium for their cars in future

Do you know? People who renew their car insurance at least four days prior to expiry are less likely to file a claim for damages over those who do it at a later stage.

Similarly, consumers driving petrol cars are less likely to claim insurance in comparison to those who are using diesel or CNG vehicles.

These are some of the interesting findings of the first-ever industry report on the behaviour of digital car insurance customers in India, compiled by Policybazaar.com's "Product and Innovation Centre".

The report titled, "Driving the Digital Way: The World of Car Insurance Buyers" has been compiled after analysing the behaviour of almost three lakh digital consumers, and focuses onstarting an informed discussion on how car insurance premium can be priced in India.

The report analyses the loss behaviour of digital car insurance customers across multitude of parameters - geography, car brand, Amount of NCB (no claim bonus) carried by the customer, fuel type, car type and vehicle age.

But more importantly, the report also attaches the correlation of digital behaviour parameters of customer to such loss ratios - the number of days prior to expiry that the customer renews his insurance as well as whether he needed assistance to buy the policy.

"In India, car insurance policies are priced according to the vehicles and geography but not on drivers, resulting into unanimous pricing for both good and bad drivers. After studying the behaviour of almost three lakh Policybazaar.com customers who have bought car insurance from us, we have been able to analyse their claims pattern and likelihood to claim in future. The report further highlights the strong correlation of claims and digital buying behaviour of the customer," said Director, Policybazaar.com, Tarun Mathur.

"As a company, we play a strategic role for all our partners in designing and bringing value creating products for the customers. The key inferences of the report will help all our partners to build profitable and sustainable businesses by segmenting profiles of customers according to their buying behaviours," he added.

"Across developed markets, car insurance customer gets a price quotes based on a number of personal characteristics besides the description of the car.In India, the current pricing model is a result of channel and cost considerations. We believe that this report and our associated work can help move the market towards delivering personalized pricing," said head - product and innovation center, Policybazaar.com, Vaidyanathan Ramani.

According to the findings of the report, the online car insurance industry (only the own damage component) is roughly operating at a loss ratio of 76 percent.

In the long term, the report envisions to aid motor insurance companies to understand and assimilate the characteristics of individual customers in India, which shall improve product offerings and enable the insurers to adopt new business strategies and tactics.