Better you drive, lesser you pay: India's new motor insurance

Indians will have to pay a lesser premium on their vehicle’s insurance if they drive better and safer.

In a big announcement, the Insurance Regulatory and Development Authority of India (IRDAI) has come up with an innovative technology-enabled concept in the motor insurance in the country.

In its endeavour to increase insurance penetration and protect the interest of policyholders in India, the IRDAI has introduced technology-enabled concepts of “Pay As You Drive” and “Pay How You Drive” in the Motor Own Damage (OD) cover.

Under these telematics-based concepts, which will be add-ons to the basic motor insurance policy, the premium will be calculated on driving behaviour and kilometres covered.

Making the announcement, the IRDAI said that it aims to move with time and meet the challenging demands of the millennials in India.

“In its perpetual endeavour to protect the interest of the policyholders and increase the insurance penetration in India, the Insurance Regulatory and Development Authority of India (IRDAI) has been seeking to facilitate the industry to move with the times.

“And as a step towards facilitating technology-enabled covers, IRDAI has permitted general insurance companies to introduce the tech-enabled concepts for the Motor Own Damage (OD) cover,” it said.

Noting that the concept of Motor Insurance is constantly evolving, the IRDAI said that the “advent of technology has created a relentless pace for the insurance fraternity to rise up to interesting yet challenging demands of the millennials.”

It said that the general insurance sector needs to keep pace with and adapt to the changing needs of the policyholders.

The new add-ons to the basic motor insurance are – Pay as You Drive; Pay How You Drive and Floater policy for vehicles belonging to the same individual owner for two-wheelers and private cars.

“Introduction of these options will aid in giving the much-needed fillip to Motor OD Insurance in the country and increase its penetration,” the Indian authority said.