The next time you go to renew your car insurance policy, you could be in for a surprise. Whether it is a surprise or a shock will depend on how good or bad you have been as a driver during the past year.
If you were good, you may just drive home a discount on your car insurance premium. If you didn’t match the insurer’s standards, you could actually end up paying much more.
The general insurance industry got de-tariffed in January 2008, which means that insurers were allowed to arrive at their own pricing instead of following a fixed price list. This means that India is moving toward a system where insurers will ask you to pay a premium according to your risk profile. If you are a reckless driver, who has a bad track record, get ready to pay more. However, for good drivers, a discount may be waiting.
Says Ajay Shah, head (customer service motor), ICICI Lombard General Insurance Co. Ltd: “The insurers are still in the stage of collating data. Therefore, as policies come up for renewal, we try to document the number of claims that the policyholder has made to profile the customer.” Insurers have also begun to share their database in order to document the track record of various drivers.
As of now, your premium amount depends on five broad parameters across most insurers: age of the vehicle, model, value of the vehicle (also referred as the insured depreciated value), geographical location and the deductible—the part of the claim amount you agree to pay in case of an accident.
Moving on, the filters will only get more personal. Factors such as what you do for a living, where you live, your age, and how many drivers an insured vehicle has will be considered to arrive at the premium amount.
Also, get ready to spend some more time on your insurance policy as you would be expected to add more information about yourself in the policy document. Information such as your gender or the area in which you live will also make a difference.
And that’s not all. Even the colour of your car could be a deciding factor. Says Amarnath Ananthanarayanan, CEO, Bharti AXA General Insurance Co. Ltd: “In countries with more evolved industries, like the US, there is enough data available with insurance companies to evaluate risk and base their premiums on that. For example, in the US, a red car would attract a higher premium as compared with other colours. This is because statistics show that drivers of red cars are accident-prone. But, in India, we are still to achieve that level of expertise due to lack of data.”