Today Economic Times printed an interesting article on Motor Insurance being sold on Internet. ET has touched the right note on predicting the future Insurance buying behavior of Indian consumers. However, it is surprising that they missed to mention www.InsuranceMall.in as India’s first Portal already selling policies Online including Motor Insurance. We are glad to get the stamp of approval by the best business news paper about the future trends which we already have the ‘First Mover Advantage (FMA)’.

ET predicts that very soon, like Airline Tickets, significant number of Auto Insurance policies will be sold through the Internet. And we agree to that.

In case of airlines, there are web-based aggregators such as makemytrip.com , cleartrip.com or travelguru.com who obtain quotes from a host of airlines and offer a platform for flyers to get the best deal. Similar on-line intermediaries are likely to help buyers do comparison-shopping for auto insurance.

According to K N Bhandari, chief executive, General Insurance Council — an association of non-life insurance companies, the industry is in favor of healthy price competition and companies are open to providing quotes to such intermediaries. One good reason why aggregators have not come forward is that IRDA regulations require that any entity offering products of multiple companies should have a broking license. Insurance companies are confident that brokers will start looking at the retail segment.

The good news for insurance buyers is that following the removal of price controls, the reaction of players has been to grab as much market share as possible. This has prompted companies to bring down rates across the board. Motor insurance rates, which were ruling at around 3% of the insured value of the car, are down to 2%. “Outside India the lowest rates are around 5% of the car value.

To ensure that there is some discipline in the market, the IRDA has said that insurers cannot cancel old tariff governed policies and replace them with new policies. This would mean that for car-owners new products would start becoming available gradually over a 12-month period depending on their date of renewal. But insurers feel that these rates are unsustainable. With the latest cars are being launched in India, even small repairs are expected to result in large claims forcing insurers to start looking at their bottom line. They are therefore intensifying their risk-based pricing approach.

Risk-based pricing: Today, a 20 year old college student who is gifted a car by his father would end up paying the same premium that a 50-year old doctor would be paying. All this is likely to change from April 1. Insurers will begin mapping data more extensively and pricing according to the driver profile. “Up to now the main inputs that go into the pricing have been the make, model, location of the car and the purpose for which it is being used. Going forward, insurers would start using owner-related inputs for pricing such as age and occupation of the owner,” says Vishaka Mulye, executive director, ICICI Lombard General Insurance.

The main problem with personalization is that an individual’s driving records can be provided only from the traffic police, who at present do not have a searchable electronic database. In developed markets this is a very important factor in the pricing of motor insurance with repeat offenders charged with driving under influence (DUI) being rejected cover. According to Bhandari, the General Insurance Council is talks with authorities to create a searchable database of traffic offences but this will take some time.

The new regime will also see cautious car owners being rewarded. Western India Automobile Association has tied up with Iffco Tokio General Insurance to introduce a new motor insurance policy. This policy allows the insured to get 2.5% discounts for etching the car’s registration number. There is an additional 2.5% discount if the driver undergoes training for safe driving with WIAA. All this is over and above a 20% general discount and 5% discount for membership of WIAA.

As the Indian market evolves it is almost certain that low-cost monoline insurance companies may come up in future. GEICO and Progressive Insurance of America are Auto Insurance companies. We have seen a trend in Health Insurance in India, what the future holds for a dedicated business line Insurance company viz Apollo DKV and Star Health Insurance. They are primarily Health Insurance companies with some smart products for Indians.

So, the bottom-line is the Online Portals like www.InsuranceMall.in will continue to create and Inter-face between end consumers and Insurance companies which eventually push the premium to competitive levels. As we see in Perfect Economy, no one player can have discriminating Premium as neutral platform like InsuranceMall will be a ready reference point to check the best rates for the best coverage available in the market. Not only the Premiums will get tracked but also the post sales service and claims experience, because the site would rate the Plan depending on customer feedback and in-house research.

We really appreciate the ET article today by Mayur Shetty, who has been doing a great job in making Insurance nuances available to masses.

Cheers !

Manish
manish@bonsaiinternational.com

for www.NewsandReviews.in

Link - http://www.buynowindia.com/newsandreviews/index.php/insurance/