Irdai permits general insurers to add tech-led add-ons in Motor OD cover

In order to facilitate technology-enabled insurance covers, the Insurance Regulatory and Development Authority of India (Irdai) has permitted general insurance companies to introduce concepts such as “pay as you drive”, “pay how you drive”, and floater policies for vehicles belonging to the same individual owner for two-wheelers and private cars as add-ons in motor own-damage policies.

According to the insurance regulator, introduction of such add-on options will aid in giving the much needed fillip to motor own damage insurance in the country and increase its penetration.

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The concept of “pay as you drive” essentially stems from the fact that policyholders will be charged premiums based on the usage of their vehicle, or the time they spend behind the wheel or the distance they cover. Similarly, “pay how you drive” follows the concept of customers paying premiums on the basis of their driving standards, or how safely they drive. Further, floater policies for owners of more than one two-wheeler and/or car are designed to make things easier for them by obviating the need to buy separate policies for each vehicles.

“This is certainly going to help insurance players by providing them with better rating parameters, which will be driver-based, not asset-based. The ratings will separate the good drivers fron the bad, where the former get discounts and latter pay higher premiums. These add-ons will essentially benefit policyholders who drive carefully or drive less. Earlier there was no mechanism to differentiate between the different categories of drivers but now they can be differentiated”, said a senior executive from a private insurance company.

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