New Delhi: After India’s insurance regulator relaxed rules to extend terms of coverage of fire, engineering and motor policies, New India Assurance Co. Ltd and Future Generali Insurance Co. Ltd are preparing to ask permission for new motor insurance products.
The freedom to give add-on covers to customers would come in the shape of depreciation protection and replacement-car covers.
Padding up: The Hyundai Motor factory in Tamil Nadu. Insurers have been allowed to file variations in deductibles under auto policies. Ramesh Pathania / Mint
While depreciation cover settles the claim amount without deducting depreciation charges from the insured car, replacement cover will give a chance to get another car when an insured car goes for repair in case of an accident.
“We are in the process of filing depreciation and spare car products with the regulator,” said Deepak Sood, chief executive, Future Generali. Sood also said that by end-March, his firm plans to raise the number of agents selling its products to 40,000 from 12,000.
“We are working on the spare car and depreciation covers to offer our customers,” adds B. Chakrabarti, managing director of New India Assurance Co. Ltd.
India’s insurance regulator relaxed the terms and conditions clause from November, effective 1 January. Insurers will now be permitted to offer add-ons and charge additional premium. The regulator also said that insurance companies are permitted to file variations in deductibles, or the amount a policyholder pays to the company before a claim money is paid.
Since deductibles are typically lower in India compared with comparable averages overseas, insurance experts see an increase in deductibles along with premium charged for new add-ons in 2009 for many auto insurance products.
“In (the) deductibles side, insurance companies will like to have products with higher deductibles in order to control their claims. They can take it as an opportunity to increase pricing,” says Rahul Aggarwal, chief executive of Optima Insurance Brokers Pvt. Ltd. “The focus of insurance companies will be more on convenience. Companies are expected to offer breakdown covers too in which insurance companies can send somebody to take care of your car in case it breaks down.”
All of these will come with higher premiums for those opting for such services.
General insurance premiums have typically fallen in India after insurance deregulation some two years ago.