Mo­tor in­sur­ance poised for dra­matic trans­for­ma­tion

Banking Frontiers - - Insurance -

Mo­tor in­sur­ance is get­ting to be dig­i­tized, more per­son­al­ized prod­ucts are on the anvil and cus­tomers can ex­pect a bet­ter ex­pe­ri­ence:

The mo­tor in­sur­ance in­dus­try in In­dia is go­ing through a trans­for­ma­tion aided by tech­nolo­gies like AI, big data and IOT, im­pact­ing in­sur­ance com­pa­nies as well as cus­tomers. While a re­cent re­port showed that of the to­tal 180 mil­lion reg­is­tered ve­hi­cles on In­dian roads, only 60 mil­lion are in­sured as peo­ple of­ten do not bother to re­new their poli­cies af­ter the ini­tial years, reg­u­la­tory changes like mak­ing third party in­sur­ance manda­tory are chang­ing the dy­nam­ics of the busi­ness. The trans­for­ma­tion is also fa­cil­i­tated by the in­creas­ingly connected world and the abil­ity to col­lect and process data. It is ex­pected that cus­tomer ex­pe­ri­ence is about to im­prove dras­ti­cally across sales, ser­vice, re­newals and claims along with bet­ter range of prod­ucts.

CHANGES IN BIZ EN­VI­RON­MENT

Changes in tech­nol­ogy and au­to­mo­bile en­vi­ron­ment have im­pacted tra­di­tional in­sur­ance prod­ucts. In the last f ew years, mo­tor in­sur­ance has be­come very com­modi­tized and in­sur­ance com­pa­nies are pro­vid­ing spe­cial pack­ag­ing for mo­tor in­sur­ance. Price is the most im­por­tant com­po­nent when cus­tomer buys an in­sur­ance - the cheap­est pol­icy has higher chance of ac­cept­abil­ity.

Anurag Ras­togi, member of the Ex­ec­u­tive Man­age­ment at HDFC ERGO Gen­eral In­sur­ance, says the in­creas­ing adoption of dig­i­tal and on­line tech­nolo­gies are steadily dis­rupt­ing the In­dian in­sur­ance mar­ket, giv­ing valu­able c ur­sors to tra­di­tional busi­ness play­ers re­gard­ing the fu­ture busi­ness trends and open­ing new av­enues for growth.

Tarun Mathur, chief busi­ness of­fi­cer at Pol­icy Bazaar.com, af­firms that mo­tor in­sur­ance in In­dia has gone through lot of changes. “There are 4 reg­u­la­tory changes in the last 7 months. There are lot of dis­rup­tions hap­pen­ing not only in­side the com­pa­nies, but out­side the in­dus­try which are af­fect­ing the mo­tor in­sur­ance in­dus­try in In­dia. HDFC ERGO, Tata AIG and Digit are some of the favourite pri­vate gen­eral in­sur­ance com­pa­nies along with the public sec­tor com­pa­nies among our cus­tomers,” says he.

Mathur also says the new age in­sur­ance com­pa­nies have pack­aged in­sur­ance poli­cies in a dif­fer­ent man­ner - they are pro­vid­ing heavy dis­counts. This rev­enue model is not sus­tain­able in the long run, as the loss ra­tio is not sup­ported by the dis­count, he says adding: “There is no prod­uct in­no­va­tion com­ing from the new-age com­pa­nies., especially around he claims side where cus­tomes ex­pe­ri­ence the prod­uct.”

RISE OF MO­TOR COV­ERS

Mo­tor in­sur­ance has always been a rising part of the gen­eral in­sur­ance in­dus­try. It ac­counts for 40% of the gen­eral in­sur­ance busi­ness in In­dia. Mo­tor in­sur­ance is a manda­tory prod­uct, com­pared to other in­sur­ance prod­ucts avail­able in the mar­ket.

San­jay Datta, chief of Un­der­writ­ing & Claims at ICICI Lom­bard Gen­eral In­sur­ance, be­lieves pric­ing of the mo­tor in­sur­ance pol­icy is still reg­u­lated. “It is the only prod­uct which is reg­u­lated. The in­creas­ing num­ber of ve­hi­cles has led to in­crease in road ac­ci­dents and hence higher de­mand for in­sur­ance prod­ucts,” says he.

Deven­dra Rane, founder & CTO, Cover­fox.com, re­veals some dis­turb­ing facts: “In spite of the manda­tory na­ture of mo­tor in­sur­ance, 30% of cars in In­dia are still not in­sured. For bikes, this per­cent­age is 70%. The agents re­ceive `300 as a com­mis­sion for sell­ing a bike in­sur­ance pol­icy, which is very less com­pared to other po­lices and prod­ucts sold by the agents. So agents are not mo­ti­vated to sell bike in­sur­ance poli­cies.”

Ras­togi of HDFC ERGO Gen­eral In­sur­ance speaks about the chang­ing face of dis­tri­bu­tion chan­nels for the mo­tor in­sur­ance in In­dia: “On­line ag­gre­ga­tors are grow­ing rapidly due to high den­sity of smart phones clubbed with ease of trans­ac­tions in find­ing the right and com­pet­i­tive price and cov­er­age. With this, there will surely be a shift in the land­scape of mo­tor in­sur­ance dis­tri­bu­tion chan­nel. Fur­ther­more, with the foray of pay­ment wal­lets, com­pa­nies in in­sur­ance dis­tri­bu­tion clubbed with sim­pli­fied prod­ucts and pro­cesses, the in­sur­ance pen­e­tra­tion is fur­ther set to in­crease.”

MANDA­TORY NA­TURE

The de­ci­sion by the in­sur­ance reg­u­la­tor to make it manda­tory for ve­hi­cle own­ers to buy long-term third-party in­sur­ance bun­dled with own dam­age cover is seen as a wel­come move since pol­icy re­newals de­cline as the age of the ve­hi­cle pro­gresses, especially in the case of 2-wheel­ers. It is also a move in­tended to high­light the im­por­tance of mo­tor in­sur­ance. In ad­di­tion, fea­tures like road side as­sis­tance and cash­less fa­cil­ity have changed the very con­cept of mo­tor in­sur­ance.

Says Ras­togi: “The reg­u­la­tor has man­dated that the in­sured (owner/driver) may ob­tain a per­sonal ac­ci­dent cover for `1.5 mil­lion. This widens the scope of cov­er­age for the pol­i­cy­holder, as the max­i­mum cover avail­able ear­lier was only `200,000. Keep­ing this in mind, we have launched ser­vices like the Overnight Ve­hi­cle Repair Ser­vice and Self-In­spec­tion App which will drive the growth in busi­ness.”

Rane of Cover­fox.com says over the years, mo­tor in­sur­ance has be­come very

Tarun Mathur

Anurag Ras­togi

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