Drive safe, enjoy lower premiums

Insurers looking at drivers' records to reward them with better rates

Starting this month, you need to shell out more to insure your car. The premiums for a comprehensive car insurance policy can increase anywhere between 10 and 20 per cent. This means if you pay Rs 10,000 as premium now, you will now require to pay another Rs 2,000 (20 per cent hike).

A dismantling of the motor pool would mean that only third-party premium (which is the compulsory cover) is expected to go up by 10-15 per cent. This apart, losses on the motor insurance portfolio are prompting insurers to hike own damage rates as well. Its quantum can be predicted by this month-end. In the last three years, comprehensive motor insurance policy rates have jumped by 35 to 40 per cent.

Hence, Mumbai resident Sahil Bade feels the rise in motor insurance rates is making it important to shop for this product. While many would agree with the 34-year-old, a larger group says they can get discounts either by buying online or through no-claim bonus.

The additional rating factors that are expected to be used
Driver’s profile	Vehicle features
Age	Installation of anti-theft devices
Occupation	Repairability of components
Gender	Cost of spare parts
Ownership	Availability of spare parts
Average use per month	Place where the vehicle normally plies
Track record	Geographical aspect

There, still, are a few other ways of reducing car insurance premiums: accumulating no-claim and loyalty bonuses, buying policies online, getting an auto association membership, installing anti-theft safety devices approved by the Automotive Research Association of India. These combined together can give a discount of 10-12 per cent.

On its part, ICICI Lombard is working on various such factors that can bridge such gaps. “To implement all this, we need to study the market and collect relevant data,” notes Sanjay Dutta, its head (customer service). “With the new parameters, one can easily get a discount of 10 per cent.”

Currently, it hardly matters whether you have driven 100 kilometers or 500 kilometers. You can be charged similar premiums in both cases. Discounts on auto premiums depend on several factors — the car’s age, model, fuel option, safety devices, etc. General insurers have been considering some more parameters to pass on higher discounts to the owner. The driver’s age, profile, gender, credit history, number of miles (s)he has driven are a few of the parameters being considered. (These are largely adopted from the West.)

Youngsters and those in field jobs (such as salespersons, journalists) are considered risky drivers. Similarly, most motor insurers consider women and those in higher age bracket to be safer drivers. Car ownership also plays an important role. If you have an employer-provided car, it will be factored as less risky because of higher maintenance expected from your company. If you have a closed parking space for your car, which means higher protection, you can fetch a good discount. Add to that a lower mileage, and you are set to get a great deal from the insurer.

Says Amarnath Ananthanarayanan, MD & CEO of Bharti AXA General Insurance: “Insurers are working on an additional set of rating factors to differentiate between a good owner/driver with others. If you are a safe driver, you will be paid for it in terms of a decent discount on renewal premium.”

On the vehicle’s end also, there are some geographical factors that need to be considered. For instance, places like the national capital region and other belts upcountry are more theft-prone. Hence, driving there or owning a vehicle there is risky. This, in turn, means insuring it becomes expensive. Whereas the cost and availability of spare parts is important too, because indigenous components cost lower than imported ones.

Experts foresee the move getting implemented within this year. “Factors like credit history and driving records will take time to implement,” says Vijay Kumar, president (motor insurance), Bajaj Allianz general insurance. “For, it needs too much of data extraction from the existing and new customers. But, some insurers have already started implementing a few of the parameters. The rest will follow the suit soon.”