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Motor premiums: Pay As You Drive is yet to take off

Mar 17, 2016

Indian IT companies like TCS, Infosys, Tech Mahindra, Harman India are providing an IT backbone for global insurers in delivering telematics solutions for bringing out "Pay As You Drive" premiums for motor insurance policies.

"Pay As You Drive (PAYD)" policies give policyholders better pricing as the premium charged is based on driving pattern, risk behaviour and traffic violations from data captured on the person's telematics-enabled carmobile device. Simply put: you pay less if you drive safely .

Global insurers like AIG Inc, Norwich Union, AXA SA and Allianz AG have adopted telematics solutions in America, Europe and other developed markets in tie-ups with automakers, telecom providers and smartphone makers to incorporate driving behaviour and usage information in the underwriting processes.

Most global insurers, including Aviva, AIG, AXA, Allianz have a presence in India through their joint venture partnerships in India like Tata AIG, Bharati Axa, Bajaj Allianz, etc but its implementation is still in the stage of pilot projects. "India has the technical expertise, but not the regulation to back it up. Automakers are wary of bringing out more expensive cars on the road by fitting them with a telematics' black box amidst cut-throat competition. Manufacturing costs as will go up as they try to adhere to Bharat Stage VI emission norms," says Vinaya Kumar Nerella, VP, Toyota Tsusho Insurance Broker India "Another drawback to fitting it in cars is that a fourwheeler motor insurance policy is about Rs 3,000-Rs 4,000 on average -and the cost of a black box is also roughly the same.So it doesn't make sense in the Indian market, where premium rates are already competitive and loss ratios are at all time high. Smartphone-based telematics solutions would be more viable," says Vijay Kumar, CTO, motor insurance, Bajaj Allianz General Insurance Co.

Most general insurers from ICICI Lombard General Insurance to Liberty Videocon General Insurance already have a pilot project on the ground for telematics. "We are also launching a pilot project soon. Telematics is definitely the way forward as it's not just about insurance, it also delivers on safety , emergency care during accidents, etc," says M Ravichandran, president-insurance, Tata AIG General Insurance.

In case of an accident, the telematics device can be used to dial 100 or 101 for police, fire personnel and ambulance services. "This will really help cut the time for getting medical aid during road accidents and avoid fatalities. The device can also be connected to road-side assistance tow-away trucks, replacement rental cars and reduce the associated claims costs," says a senior executive at TCS.

"The device can also alert the user on vehicle performance issues and trigger a maintenance check," he adds. On the aspect of road safe ty Infosys is working on advanced driver assist systems (ADAS) enabled services.

"Infosys has a system for detecting driver fatigue using facial analysis the software detects eye blinks, yawning and facial expressions and triggers a notification either through haptic (vibration) alert on the smart watch or beeps on the head unit panel," says Sudip Singh, SVP and Global Head of Engineering Services, Infosys.

"Infosys has developed a telematics dongle that can be retrofitted on any model of a automotive vehicle that will collect driving data. The dongle has accelerometer, gyroscope, magnetometer, GPS sensors along with bluetooth GSM modem for transmitting the driving data to the cloud.An algorithm running in the cloud computes the driving quality and scores the driving. This can be used by insurance companies to compute risk and insurance premium," he added Many long-distance goods carrying trucks in India already have a GPS locater enabled. Even for short-distance transport of goods one can now track via GPS-enabled devices thanks to the boom of online retailers like Flipkart, Amazon and Snapdeal.

"With telematics, we'll have better risk management for fleet insurance in the case of marine cargo. It would also be pretty easy to track stolen vehicles," adds Tata AIG's Ravichandran.

Source: The Times of India

Updated List of Web Aggregators: IRDAI Web Portal

Mar 09, 2016

IRDAI has published the latest list of Insurance Web Aggregators on its website.

As per IRDA (Web Aggregators) Regulations 2013, a “Web Aggregator” is a Company registered under Companies Act, 1956 (1 of 1956), approved by the Authority under these guidelines, which maintains/owns a web site and provides information pertaining to insurance products and price comparisons of products of different Insurers and offers leads to an Insurer / Insurance Broker.

Check the latest list here!

Third-party motor insurance premium to go up by 9-30%

Mar 08, 2016

Insurance premiums might rise by nine to 30 per cent across categories in private cars, two-wheelers and commercial vehicles, with the Insurance Regulatory and Development Authority of India (Irdai) proposing a revision in motor third-party premiums.

For private cars, with engine capacity not exceeding 1,000cc, the rise proposed is 30 per cent. For those exceeding 1,000cc, it is 25 per cent.

Third-party motor premium is regulated by Irdai and revised yearly, based on inflation and claims. This type of insurance is mandatory for all motor vehicles on Indian roads and covers the owner from third-party liability arising out of accidents or damage.

For two-wheelers, there would be a rise of 10-15 per cent for vehicles up to 350cc, while a 10 per cent drop has been proposed for vehicles exceeding 350cc.

For commercial vehicles, a rise of 25-30 per cent has been proposed. Insurers say claims are high in this segment.

Based on the comments from stakeholders, Irdai will bring out the final rates to be applicable for the financial year beginning April 1.

Source: Business Standard

New Irdai norms to ensure faster growth of general insurers: Industry leaders

Mar 08, 2016

The Rs 84,000-crore general insurance industry feels that the 'use and file' norms unveiled recently by Irdai will ensure faster growth in the industry, though the regulations may lead to price rise of such products.

The new norms, coming into force from April 1, will allow marketing of corporate products even before the regulatory approval.

"The new system would enable insurers to adapt faster to the requirements of commercial entities. All of these changes are positive, indeed path breaking," ICICI Lombard General Insurance managing director and chief executive Bhargav Dasgupta told PTI.

"We have asked the industry body General Insurance Council (GIC) to prepare the common wordings while designing covers for the corporates," New India Assurance CMD G Srinivasan, who is also the chairman of GIC, said.

"A price rise across the segments is very much expected", he said without divulging any further details.

According to Srinivasan, the new norms will bring in a great deal of discipline in the general insurance industry improving the financials of the industry.

"With the stipulation that the general insurers have to operate under 100 per cent combined ratio, the industry should see rate hardening which over a period of time would ensure underwriting profits," SBI General senior vice president, marketing and product development Gunjan Ghai said.

In some of the competitive risk areas, this would likely improve the profitability of insurers as a whole, he added.

Post detariffing in 2007 under which pricing of general insurance products are being determined by the market forces, the general insurance industry has seen a cut throat competition in pricing of the products leading to losses in the industry. The only exception is third party motor premium which is the only product whose price continues to be fixed by Irdai.

Sasikumar Adidamu, chief technical officer (non-motor), Bajaj Allianz General Insurance said that "the Irdai norms would facilitate insurance companies to adopt a more structured approach while designing products, pricing and diligently manage the operations of the entire product lifecycle. This change will stand in good stead for companies, as they will be able to create more innovative and need based products."

"The new norms would check under pricing as the pricing would require actuarial and technical justification that has to be approved by a product management committee, a special committee to be formed by the concerned company", he added.

"The general insurers who are already doing business in the current market will be benefited to sell new products. This will contribute growth in gross written premium for the year 2016-17," Future Generali India Insurance MD and CEO Krishnamoorthy Rao said.

Rao advised that the new norms should be applicable for retails lines too on the plea that 'use and file' guidelines can help insurers offer varieties in retail products which can take care of consumer needs on day to day basis and it will result in boosting the growth under retail lines."

However, a section of the industry is not in its favour.

"Industry is yet to mature to be empowered. In order to protect retail customers' interest, regulatory oversight is desirable at this juncture", Tata AIG General Insurance president M Ravichandran said.

Source: The Economic Times

93% respondents do not own home insurance policy: Survey

Mar 08, 2016

Around 93 percent of respondents of a recent survey conducted by ICICI Lombard do not own a home insurance policy.

This, despite the fact, that 62 percent of those surveyed were aware of the benefits of a home insurance policy, a company statement said.

It revealed that most home owners did not feel the need to get their homes covered and 59 percent of the respondents said that they would buy a home insurance policy if the premiums were lower and the claims process was made easier.

"Home insurance, as a segment, is hugely under-penetrated. Although a home insurance policy can help ease the financial burden that arises out of severe disasters such as floods, storms, earthquakes and riots," ICICI Lombard chief Underwriting and Claims Sanjay Datta said.

The survey was conducted across a user base of 2,000, half of whom were in the age group of 36-40 years. 62 percent of the respondents had acquired their homes only in the last three years.


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