Telematics can reduce car insurance premium

Telematics allows the monitoring and recording of driving behaviour of drivers. Once you opt for the Drive Smart option, you will get a Sim-enabled telecom device to fit in the car

Use of technology is simplifying complex products like insurance. In line with this trend, Bajaj Allianz General Insurance Co. Ltd has introduced Drive Smart, a new service based on telematics: an integration of information technology and telecommunications. Using this technology we can send, receive and process information from vehicles. This could enable customised insurance policies for cars, which are currently not available in India.

“Till date, insurance is sold on the basis of the make and model of cars, without considering the driving habits of car owners or drivers. Telematics enables the insurer to provide premium discounting based on driving patterns," said Alok Bhatnagar founder and chief executive officer of, a web-based insurance aggregator.

What is telematics

Telematics allows the monitoring and recording of driving behaviour of drivers. Once you opt for the Drive Smart option, you will get a Sim-enabled telecom device to fit in the car. Among others, it will monitor the average speed, brake usage, speed variations and driving at night. With a mobile app, users too can monitor this data, and they can also use the app to monitor the movement of their vehicle remotely.

The insurance company will use this data at the time of policy renewal to determine if the user is a ‘safe driver’. Based on this, you could get discounts on the own-damage part of insurance premium.

What does it cost

To use this option while insuring smaller hatchbacks, you would have to spend Rs1,500-2,500 more each year. This extra money, according to the company, would be towards add-on covers like road-side assistance, accident shield, engine protection and depreciation shied. This option is available only with bundled insurance plans for private car owners who buy some add-on covers with the basic insurance.

“The service is free for 3 years and we there will be a nominal charge for the service after that, which we have not yet decided," said Adarsh Agarwal, head-actuarial and vice president at Bajaj Allianz General Insurance.

For bigger cars, this amount could vary based on the insured declared value.

The telematic device in the car remains a property of the insurance company, which bears the cost of its maintenance and its mobile data usage.

Mint money take

“The model is not yet proven in India but globally such products have helped reduce premiums for good drivers," said Balachander Sekhar, founder and chief executive officer,, an online broker that deals only with motor insurance.

There are no competing products in the market at present. Though some car-makers have come up with telematic devices for their cars, the data collected is not being utilised for calculating insurance premiums.

Keep in mind that the market for telematics in insurance has not developed yet so your option right now is limited to Bajaj Allianz (free in the first three years), however you can earn a discount on insurance premium at the time of renewal depending on your driving behaviour. This will be in addition to the no-claim bonus that you could have got.

“We anticipate that a person who is a good driver could get a discount of up to 30% on the premium," Agarwal said.

So if you happen to be a safe driver, according to Drive Smart’s algorithms, you could save some money on your premium. Our advice: wait for the market to develop a bit.

Note: This story has been modified to clarify the product’s details.