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Future Generali Rolls Out Pay As You Go Motor Insurance Policy In India
Car-Owners will soon have the option to buy insurance cover in proportion to the extent they use their vehicle. Owners of high-end vehicles with very little mileage on their odometer will gain vastly from the new pay as you go pricing for vehicles planned by Future Generali Insurance.
Speaking to ET, Future Generali India MD & CEO KG Krishnamoorthy Rao said the company is currently running a pilot project where data is being through a GPS device placed in 40 vehicles on the road in various parts of India. Based on the data we collect from these vehicles, we will be able to arrive at a pricing. The GPS device gathers data based on the mileage, the roads on which the vehicle has run and the time of the day. The insurance company will price the cover based on each of these parameters. "The idea is to sell a minimum base cover that will be enough for say 30 days of driving. Instead of paying for the entire year's premium in advance, the policyholder can pay according to his usage."
Future Generali plans to introduce this product in association with Logica, a UK-based IT company which will provide the hardware as well as the back office support in terms of the collection of data through the GPS system. According to GBS Bindra, global innovation director at Logica, additional utility of the device is that it can also track the vehicle in case it is stolen. "The cost of the device will be built into the cover and there will not be any additional payment to be made by the car-owner," said Mr Bindra. He said the device will use a combination of GPS and GPRS - the communication system used by mobile phones to track the vehicle.
According to Mr Krishnamoorthy, the depressed pricing for auto insurance would not make it viable to have the product for A and B category vehicle. The economics would work in larger cars. Pay as you go schemes were introduced in other parts of the world, including the UK by Norwich Union more than two years ago. However, the initiative was hamstrung by the high cost of the technology at that time. "In the last two years, the cost of communications technology has dropped down dramatically and it is totally different proposition now," said Mr Bindra. In addition to using the service for motor cars, Future Generali is also looking at the GPS-based service to track road consignments where it is providing cargo insurance. "We are talking to commercial vehicle manufacturers to see if there is a likelihood of pre-installing such devices which will bring down their cost considerably," he said.
COVER DRIVE
Future Generali is currently running a pilot project where data is being through a GPS device placed in 40 vehicles on the road in various parts of India The GPS device gathers data based on the mileage, the roads on which the vehicle has run and the time of the day and the insurance company will price the cover based on each of these parameters
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