The Insurance Regulatory and Development Authority of India (IRDAI) has decided to allow general insurance companies to offer new, add-on covers along with motor policies’ own damage component. That is, you can pay an extra premium to get these extra covers on top of your base policy.
IRDAI said that its goal was to help more people in the country get car insurance.
“With the rise of technology, the insurance industry has had to move quickly to meet the interesting and challenging needs of millennials. The general insurance industry needs to keep up with the changing needs of policyholders and adapt to them “In a letter, the insurance regulator said.
“Pay-as-you-drive,” “Pay-how-you-drive,” and a “Single floater policy” for a retail policyholder with more than one two-wheeler or car have been approved as add-on plans.
Pay as you drive
Even regular travel isn’t as important as it used to be in the world after a pandemic. Even going to the office or the grocery store has turned up pretty good options. Because of this, there are a lot of people who own cars but don’t drive them very often. In the past, these car owners would have to pay the same premiums on their auto policies no matter how they drove.
The IRDAI’s recent announcement has made it more complicated for policyholders to pay their premiums. The pay-as-you-drive model is an add-on that is based on the distance or number of kilometres driven. So, instead of having to pay a flat rate for everything, people pay a premium based on how much they use. This is especially helpful for people who work from home or have more than one car.
Pay how you drive
How you drive can tell a lot about how much insurance you need. A responsible driver is less likely to get into an accident. Before, there was no way to figure out how likely this was to happen and include it in a policy. The “Pay How You Drive” model, which was just approved by the government, is going to change this part of insurance in a big way.
Because of the rise of technology, a policyholder’s driving habits can now be tapped into and used to tailor his or her plan. This means that a person who has always followed the rules while driving is likely to pay lower premiums than most people. Respecting traffic signals, going the speed limit, and staying in your lane can help you in more ways than one. Usually, the GPS tracker in your car is used to figure this out. Behind the scenes, there are algorithms that figure out the right premium for each driver.
This rider is great because it not only gives the car owner a fair deal, but it also makes other drivers more likely to follow the rules.
Under the regulatory sandbox framework, insurers can offer pay-as-you-use motor floater policies and pay-as-you-use pay-as-you-use policies.
Floater policies
If you own more than one car, it might be annoying to have to deal with different insurance policies for each one. Also, if you have two or more insurance policies that don’t work together, you have to pay a higher premium than other people. A floater policy is a clever way to solve this problem. This lets you buy one policy that covers more than one car.
It helps the policyholder pay a lower premium and spread the benefits of the policy to more than one vehicle. Even two-wheelers can be added with this optional add-on. Also, the benefits of safe driving can be easily carried over from one vehicle to another, saving the policyholder time and effort.
Overall, the IRDAI’s newest rules set up a very interesting future for auto insurance in India. These examples show that technology has made it possible for the insurance industry to pay more attention to the specific needs of customers and offer products that are better for policyholders.
