Soon, your driving style will decide your auto premium
The premium you pay for auto insurance could soon depend on how much you use your car, and how well you drive.
The premium you pay for auto insurance could soon depend on how much you use your car, and how well you drive.
On Monday, private sector general insurance player Bajaj Allianz launched Drive Smart, the first product that works on telematics, a technology that allows transmission of data over long distances.
Drive Smart is a GPS-enabled device that would be fitted inside your car. Using telematics, it will relay information about your driving style including the amount of time you drive the car, anywhere in the country. The data will then be used to help align your motor insurance premiums — the less you drive, and the better, the lower would be the premium.
Vehicle insurance is at present based on its year of production, and the make.
“Currently we do not look at the customer. People who have been driving safely or sparingly have been compensating for the ones who don’t drive appropriately. This (telematics) will ensure more fair and transparent service ,” said Tapan Singhel, MD and CEO, Bajaj Allianz General Insurance.
Such insurance products have been around across Europe and America for a few years. Globally, about 12 million customers bought telematics-based insurance policies in 2015, and this is expected to accelerate to 142 million by 2023, according to IHS Automotive.
Bajaj Allianz will have collect a lot of data before it begins adjusting premiums. This will also depend on how many people adopt the device, which is being given for free to its customers for now.
Telematics devices typically cost ₹2,000-6,000
ICICI Lombard, which has done pilot tests with telematics in major cities, says the cost of the device remains a key challenge . “The cost of the device is still high, almost 50% of the premium in some cases. Who will bear the costs? Also, I might put the device on a car with a good driver, the vehicle may be hit by others and I will still have to settle a claim,” said Amitabh Jain, head of motor underwriting, ICICI Lombard.
