You, your car, your daily usage of the vehicle and your age are under the scrutiny of insurers as they arm themselves for a de-tariffed regime.
Your motor insurance premium will depend on whether you lock up your car in the garage or park it on the sidewalk near your home or office, the age bracket you fall under, the colour of your car, whether the model you drive has been classified as being safe or prone to accidents and heavy claims and whether one takes the car on major accident-prone areas like highways and major cities.
| How insurers are covering themselves |
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Identifying accident-prone regions with poor road network Analysing make- and model-wise claims Ascertaining the level of indigenisation of the vehicle Collecting information on the age group of the driver/owner/owner-cum-driver Seeking information on the purpose of the vehicle - private or tourist Analysis of past claims Encouraging prevention of theft by organising camps/roadshows and promoting use of safety mechanisms like anti-theft devices |
Private insurers are working behind the scene as they gear up to the detariffed scenario. They are cross-questioning customers in a major attempt to build a database that includes right from the driver's age, driving history, colour of the vehicle and its daily usage, among other things.
"Currently and also in the past, customers used to get motor insurance with minimum information being provided to the insurer. Now since we need and wish to create a proper database, most of the insurers, mainly private insurers, have come out with elaborate proposal forms, asking the driver's age, driving history, colour of the vehicle, daily usage, etc," said Bajaj Allianz General Insurance Company chief executive officer Kamesh Goyal.
However, insurers are facing some resistance in collecting this data. Private insurers have classified Indica and Maruti as more risk-prone cars when driven on highways.
Red cars have also been classified as prone to accident especially when a youth is behind the wheel.
White cars, especially in the state capital of Delhi, are prone to theft and will attract a higher premium.
"We are gearing ourselves up to pricing motor insurance policies when the industry has the freedom to price motor risks. Through proper data collection, we are trying to introduce rating-factor based pricing that will come into play at a later stage," said Royal Sundaram Alliance deputy managing director Antony Jacob.
Insurance companies are trying to understand the dynamics of road conditions and accordingly price policies, said a senior executive from a state-owned insurance company.
Delhi, considered to be a high accident-prone area since roads are broad and drivers tend to drive fast, will face significant increase in premium costs, said Jacob.
Today, motor insurance premiums are higher in the state capital, but this is not adequate, he said. This is as opposed to the heavy traffic in Mumbai city where people drive bumper to bumper.
"When we have the freedom to charge premiums, pricing will depend on a variety of factors including whether one locks up one's car in the night or leaves it parked outside one's house. It will also depend on the age of the owner, his driving history and claims experience," said Jacob.
Contrary to the global experience, Indian car owners rely heavily on drivers. As it becomes difficult to rate chauffeurs and price the policy accordingly, Royal Sundaram is looking at offering certification for drivers.
This will translate into a rating when it comes to policy pricing. At present, under the fixed tariff set up by the Tariff Advisory Committee, there is no variation in pricing for one car to another. However, motor insurance is expected to be detariffed by 2005.
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