MUMBAI: If general insurance companies have their way with the regulator, your accident insurance claim will be rejected if a friend rams your car. It may well be curtains for people taking joyrides in friends’ cars.
Your motor insurance premiums will also go up depending on how many in your family use the vehicle, a move which could face resistance. Rejection of claims in accidents where the vehicle is driven by a person not part of the list provided at the time of buying a policy is among the latest proposals the industry is taking to the Insurance Regulatory Development Authority for approval to boost profitability.
“This is the only way to bring down frauds in third party claims,” said Vijay Kumar, head of motor insurance at Bajaj Allianz. “Only 35% of the commercial vehicles on road are insured but we see large part of the claims from them.”
The claim will be rejected even if by law the person carries a driving license, said two people familiar with the plan.
The general insurance industry, which has been incurring losses due to their poor underwriting standards and fake third party motor insurance claims, are working up novel ways to boost their profitability. Although the industry is seeking these proposals, it is not clear whether the regulator will approve them.
Claim ratio on third party motor insurance, which is the proportion to the premium earned, has gone up to 213% last fiscal, implying for every Rs 100 earned in premium, companies paid a claim of Rs 213.
“We are actively looking at rate differentiation through number of users in a limited manner,” said Sanjay Datta, chief-underwriting and claims, ICICI Lombard. “We don’t have external data sources to verify driver behaviour like in the west.”
But enforcing these rules even if they are admitted by the regulator could be difficult in a country where some car owners force their servants to step in for the accidents caused by them.
But insurers who have been loss-making for nearly a decade are determined to change the system. In fact, they are looking to use the data from the credit bureaus to determine the premium, though there is no data on insurance customer behaviour.
“If people have good track record in Cibil, they do not have fraudulent tendency and their behaviour towards driving is strong,” said Kumar.
If a policy seeker has top credit profile, insurers may give as much as 40% discount on premium.
Similarly, if a car is chauffeur driven, insurance companies may offer 10% discount. “The chances of theft are lesser if a car is driven by chauffeur,” said ICICI’s Datta.
Motor insurance contributes one third of the premium income for the non-life industry. As of September, the industry had earned Rs 13,626 crore by selling motor policies.