Technology is coming to reduce our car insurance premiums, or is it ?
How to reward good drivers with low premium, and hike premiums for risky driving ? This has always been a million dollar question for insurance agencies. Usually insurance companies do it by building on historic data, based on age, vehicle category, gender, city, etc.
This profiling varies from one insurer to the other.
Though it broadly categories insurance purchasers , but its still not a fool proof method of providing justifiable insurance covers. For example, a person driving the same type of vehicle might drive it very carefully. No excessive braking, or sudden accelerations, too high speeds etc.
Whereas another person, might be breaking all speed rules and is very rash in driving.
While buying an insurance, whether online or offline, there is no way to tell which customer will behave with how much rick appetite.
However, telematics offers a solution to this premium calculation model. Telematic is a device which is fitted externally in a car, and gives patterns about usage, location and other parameters related to the car’s performance.
By accessing this data, at time of premium calculation, insurers will be able to ascertain the correct risk profile of the driver and offer premium accordingly.
However, telematic will take some time to come to India. Unlike other countries, here even manufacturers are against the idea, as they feel that the devise will impact the car’s performance and security !!
Even Insurers are not pushing it, since motor insurance premiums are at an all time low in india. This is because of the intense competition amongst insurers. Hence, insurance firm contest that even with this data, they will not be able to play much with the insurance rates.
So, though the concept and solution is the best possible, there aren’t many takers for it now in Indian market. This is preventing the “good drivers” from getting a lower premium for their cars.
Lets hope that situation changes soon, and we have technology aid us in determining car insurance premiums.