CHENNAI: While geography and your car's make and model have been the prime factors that determine premiums for motor insurance, insurers are now taking into account other factors - from your driving history to the colour of your car or even the parking slot of your vehicle.
In some countries like the US, the driving history of the owner is the most important factor for determining insurance premium. "
After all, it is the driver and not the vehicle that causes accidents. Therefore, with an experienced and mature driver, the chances of accidents are lower. Moreover, an inexperienced driver is more likely to engage the clutch than an experienced driver, which in turn results in grea ter wear and tear," said Ajay Bimbhet, MD, Royal Sundaram Alliance Insurance Company.
But it's not just about careful driving.
Even your daily car parking spot (whether closed, open or roadside parking) may have a bearing on the premium. And even the colour of the car could have a bearing on its premium. "Black cars are generally more prone to accidents while white cars are more prone to thefts," Amarnath Ananthanarayanan, CEO & MD, Bharti AXA General Insurance said. These additional factors result in a 10-15% addition to the overall premium calculation.
According to the sector regulator Insurance Regulatory and Development Authority (IRDA), many factors determine the premium. For an own damage cover (that insures the policy holder's vehicle), different insurance companies charge different premiums for similar coverage. These include vehicle registration details and engine capacity and driver details ranging from age, gender, qualifications, licence validity and previous insurance history, if any.
Car marketers, however,
said that motor pre mium could be much more customized but for the fact that in India it is controlled by sector regulator IRDA. Jnaneswar Sen, senior VP (sales & marketing), Honda Cars India, said, "The profile of the customer and the car model is among 50 or 60-odd parameters used to determine premium in developed markets where insurers do a co-relation analysis based on past data to come up with customized premium. But India is regulated by IRDA so the premium is standardized."
Jaideep Devare, MD of Mahindra Insurers Brokers, said, "Although insurers are increasingly collating information on consumer behaviour, currently this has not yet been comprehensively incorporated into the process of determining motor premium.
We anticipate, however, that it's just a matter of time before customized premium will become the order of the day, based on varia bles like colour of the car, driving habits, etc, and the 'Pay-As-You-Drive' concept practised internationally."
Insurers, however, expect the trend towards more customized premium to grow. "Many new factors would start playing an important role in rating of the risk and determination of the premium in respect of motor insurance. These include the age of the driver and past claims history of the driver," Neeraj Moorjani, head (customer life cycle management), Chola MS, said. There are rewards too. "For instance, if you have been driving for a long time with no previous recorded history of driving offence, this can result in better addition to no claim bonus at the time of renewal," Ananthanarayanan said.
Also, the IRDA website says, in addition to NCB, there are additional discounts available under own damage premium for membership of Automobile Association of India, vintage cars (which are essentially private cars certified by the Vintage and Classic Car Club of India). Concessions are also available for specially designed/modified vehicles for the blind, handicapped and mentally challenged persons, which are suitably endorsed.
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