Simplifying Vehicle Insurance Processes With New Age Tech

There was a downfall in motor insurance sales in the month of April this year because the customers were not using their vehicles during the lockdown. However, May onwards, customers started renewing their policies as lockdown curbs were lifted and the economy opened up. By June-July, the business of motor insurance revived to pre-Covid levels. More and more customers are now buying motor insurance online to avoid physical contact.

However, 20-25% of customers are still not renewing their motor insurance policies as they aren’t using their vehicles to avoid going out during the pandemic. Over a period of time, with easing out of stringent measures imposed during the lockdown, customers will begin to renew their motor insurance policies.

In 2018, the Supreme Court had given an order that a multi-year third party policy will be mandatory for newly purchased vehicles. The apex court said that for a brand new car, there should be a 3-year third party policy and for a two-wheeler a 5-year third party policy. So, new policies were introduced in the market for newly purchased cars that have a 3-year third party and 3-year own damage component or a 3-year third party and 1-year own damage component. As a result, the premiums had increased and customers had to spend more. Certain difficulties were also faced by actuaries in terms of pricing these long term policies. In addition, insurance companies found it difficult to ascertain No Claim Bonuses for customers.

Keeping all of these things in mind, IRDAI said that customers owning a four-wheeler can either buy a 3-year third party policy or 1-year own damage policy along with 3-year third party policy. So, 3-year third party policy and 3-year own damage policy has been scrapped. In the case of two-wheelers, customers can buy one-year own damage cover along with a five-year third party cover rather than 5 years third party cover along with 5 years' own damage cover. From a consumer perspective, the premium cost decreases, and they aren’t locked into a particular policy for a long time even if they are not satisfied with the services of the insurer.
((calculator))

There is a wrong perception among the customers that claiming insurance policies is a hassle. None of the general insurance companies in the motor business are making any profits. They are looking at a 90-100% loss ratio. Claims are being paid out timely by motor insurance companies. One of the reasons that this perception issue exists is that unlike life insurance, where the customers interact with the insurer in case of claims, in motor insurance, the customer generally interacts with garage owners. This perception also comes from the kind of policy customers have bought. If they have bought a comprehensive policy that includes depreciation amount, they can not say that claim is not being paid in total. So, customers must discuss with insurance companies to process their claims better.

Generally, in case of an accident, the customer takes the vehicle to a garage. The communication doesn’t happen between the customer and the insurer causing miscommunication. A customer should call up the insurer on their claims toll-free number and inform them about the accident immediately. The insurance company will provide further assistance to the customer about the next procedure. Insurance companies have revamped their processes technologically for the ease of the customers. Claim processes have evolved over the years for the convenience of customers. Earlier, claims were given as reimbursements, then came cashless claims to make claims processes better for the customers. Nowadays, insurers have services like picking your vehicle directly from the garage for repair and getting it delivered to your home for the ease of the customers. Many insurers pay the upfront claim so that customers can get their car repaired whenever they have time.

Insurers like Bajaj Allianz, HDFC Ergo, SBI General have introduced the Spot Claim feature. This feature enables immediate assistance in the light of an accident. They have an app using which customers can upload videos or pictures of their damaged car. These damages are assessed on the spot and insurers offer an upfront amount for repair. Many insurers like Bajaj Allianz, Go Digit, SBI General, Magma HDI are offering pick up and drop service which means as soon as an accident happens, they arrange for a pick-up and drop facility from a nearby garage at no extra cost.

At the time of a motor insurance claim, there is a Compulsory Deductible Charge or File Charges which have to be paid by the customer. If the vehicle is up to 1500 CC, the customer has to pay Rs 1000. Whereas if the vehicle is more than 1500 CC, the customer has to pay Rs 2000.

Motor insurance claims are classified into three categories. The first type is accidental and repair claims which address a vehicle repair post an accident. The second type is total loss claims which address theft of a vehicle. The third type is Constructive Total Loss wherein the insurer gives the complete value of the car in case repair work exceeds 75% of the Insured Declared Value. Total Loss and Constructive Total Loss are processes that take a longer time. Accidental claims are processed much faster.