The Indian insurance industry is moving away from jargons and relying on simplified insurance products and services to serve its customers. As a result, current and potential policyholders are able to understand insurance policies in a better manner and make an informed decision. With the rise in InsurTech companies and the new-found affinity of traditional insurance providers towards going digital, the industry is becoming more and more customer-friendly. Wait, there’s more to come. The following auto industry trends have created an impact on global insurance companies and are poised to affect the Indian car insurance industry in the near future.
Currently-available automatic transmission cars in India are at a basic level compared to highly-automated cars being tested by Tesla Motors and Google. Those cars are aiming at full automation where the term ‘driver’ doesn’t apply as the car is self-driven. Will such autonomous cars derail the car insurance industry? Absolutely not. However, they might affect the industry by reducing the number of accidents. But, car insurance is not just about accidents, it is also about a cover against calamities and theft.
Rising fuel prices and environmental concerns have prompted the auto industry’s stakeholders to consider electric cars as a viable option. The barriers faced by electric cars pertain to lack of infrastructure, for example – unavailability of charging stations. Assuming electric cars become the norm in the years to come, the car insurance industry’s outlook towards it will be based on the damage extent of a car, in case of an accident. Electric cars will need powerful, rechargeable batteries, which can cause a fire when involved in an accident. The cost of the car and its parts shall also be a factor.
No matter which type of car you are driving, it can be turned into a ‘connected car’ using telematics. A telematics device can be installed in a car to make it a ‘connected car’. This way, it can track driver behavior which is useful in determining an ideal car premium. Connected cars can lead to enhanced underwriting. Information such as the car’s speed, the distance it travels on a regular basis, the number of times it halts abruptly, its fuel consumption, whether safety measures are undertaken or not, etc. can be recorded, and usage-based car insurance premium can be charged.
Driving a car in metro cities is getting troublesome day by day. The surge in traffic and construction-related activities have increased the daily travel time. With limited roadways and car-parking infrastructure, people have started considering different travel options, such as using cabs. This demand and supply metric has led to a growth in app-based cab services such as Uber and Ola. In terms of insurance, Acko General Insurance has already tied-up with Ola to provide trip-based insurance to customers for INR 1.
Hired cars do have a car-pooling option but community-based carpooling is what will help in reducing traffic and pollution. Can four people residing in one locality come together and rent a shared car to meet their daily travel needs? These rented cars can be insured for a short-period by the respective short-term owners. Is the Indian insurance industry ready for such drastic measures? The answer, it is in transit.
The Indian car insurance sector is warming up to these trends. In certain cases, it has tested waters, it knows what’s coming, and is contemplating making the shift. This industry is heavily regulated, and rightly so, by the Insurance Regulatory and Development Authority of India (IRDAI). Thus, overnight changes cannot happen, as even potentially-game changing initiatives need to be looked from all perspectives before sanctioning them.
Read informative Car Insurance Articles at Acko.
Read all our insurance & non insurance related articles here.