Soon, customers will be able to pay their car insurance premium depending on the distance they travel.
Beginning next fiscal (2013-14, general insurance companies plan to launch pay-as-you-use car insurance policies, in which people who travel within the city will need to pay lesser premium compared to those who travel long distance.
“The car which travels more has more risk than the car which remains within the city limits,” said Amarnath Ananthanarayanan, managing director and CEO, Bharti AXA General Insurance.
“There will a GPS (global positioning system) base device installed in the car, which will track the distance travelled by a car. We will analyse this data and rate customers.”
While Bharti AXA General Insurance and Tata AIG General Insurance are planning to launch the product in the next fiscal year, Bajaj Allianz General Insurance said it would launch the product only when the market is ready for it.
“Pay-as-you-use products are already selling in the US and Europe,” said Yashish Dahiya, CEO, Policybazaar.com. “Now they will soon hit the Indian general insurance market due to rising competition.”
The product is also likely to prove a life-saver since in case of an accident, the device can help in locating the car.