Soon, safe driving will pay

Irda to create a database that will help insurers tap into the claim history of drivers.

Reckless drivers, beware. The Insurance Regulatory and Development Authority (Irda) has been collecting data of claims history of individual drives for some time.

The reason: The insurance regulator wants to create a database that will help insurers get claims history of car drivers.

A senior official in Irda said, “We have been mining this data to create a one-stop location for general insurers to see the claims history of the driver when he/she approaches them for an car insurance product. This, we expect, will be a Credit Information Bureau of India or Cibil-like body for the general insurance industry.”

This database is expected to help insurers to underwrite good risk and reject or hike the premium for those with high claims record. At present, insurers decide the premium based on their overall claims history.

For instance, a general insurer can charge a higher premium for a similar car in Delhi vis a vis another because its experience in that city has been bad. A database will help base decisions on the individual’s history, rather than insurer’s experience. Quite similar to what has been happening with home loan and personal loan seekers in the banking industry.

KG Krishnamoorthy Rao, MD & CEO of Future Generali General Insurance said that Irda-appointed repositories have been collecting data for almost a one year from general insurance companies to address pricing issues.

According to the Irda official, since there is no ‘qualitative’ mandate from Irda on what kind drivers can be covered under motor insurance, insurers just have their own experience to go by to decide the premium. Before the de-tarrifing took place in the motor insurance, the vehicle’s cubic capacity was taken into consideration.

Besides their claims experience, insurers only have some general information to go by such as, the car, the age of the driver and the profession. Some like a doctor or chartered accountant is considered safer than small businessmen. So there is a discount of say, 20-30 for doctors whereas the businessman may get only 5-10 per cent.

“As a result, the premium charge across the board is with a slight difference between drivers with many claims and those with none. The global practice takes into account each driver's claim history or profile and accordingly, cover is priced,” said the Irda official, adding though the regulator has not set any particular deadline to launch this facility, they are actively pursuing it.

“A common database will be a welcome move not just for motor insurance but also for health,” said Amarnath Ananthanarayan, MD & CEO of Bharti AXAas General Insurance.