But, third get together (TP) motor insurance coverage stays unchanged, regardless of being a compulsory and high-impact product. It’s time we revisit this area and produce it updated with the realities of at present’s mobility and danger surroundings.
TP premiums have remained basically unchanged, apart from a number of classes, over the past 5 years. Depart apart inflation and different components, the problem is way deeper.
India’s highway security scenario is alarming. Yearly, the nation witnesses practically 5 lakh highway accidents, leading to over one and a half lakh fatalities and leaving greater than 4 lakh residents injured. (supply: MORTH)
Regardless of these figures, third get together motor insurance coverage premiums stay fastened based mostly on car class, with out factoring within the particular person behaviour or historical past of the driving force.
This one-size-fits-all pricing construction fails to incentivise protected driving and sometimes ends in accountable drivers subsidising the riskier ones.We should create a extra equitable system. De-tariffing third get together insurance coverage is just not solely about making certain the viability of insurance coverage enterprise fashions or sustaining sound loss and mixed ratios.It’s about constructing a extra accountable, accountable and safety-conscious society. When premiums are based mostly on particular person danger, it brings equity into the equation and encourages individuals to drive extra fastidiously.
A risk-based premium construction would allow insurers to evaluate components corresponding to driving historical past, declare frequency, accident information, and site visitors violations when figuring out premiums.
Such an method can be useful for industrial car operators as properly. Fleet homeowners who put money into driver coaching, comply with upkeep protocols and uphold security requirements can be rewarded with decrease insurance coverage prices, whereas others can be nudged to enhance their practices.
Past equity, the broader societal advantages are important. A system that financially rewards protected driving behaviour may contribute to a tangible discount in accidents and fatalities.
This could ease the strain on emergency medical companies and public well being infrastructure. Initiatives just like the Zero Fatality Hall on the Mumbai-Pune Expressway have demonstrated how behavioural and structural interventions can scale back highway crash deaths by nearly 60 per cent.
Know-how can play a transformative position. With instruments corresponding to GPS monitoring, telematics, synthetic intelligence-driven driving scores and digital claims histories, insurers can construct detailed behavioural profiles for every driver or car.
This allows the creation of dynamic pricing fashions and even reward-based methods linked to efficiency. Insurance coverage can thereby evolve from being a passive monetary product to a proactive instrument for behavioural change.
The prevailing uniform pricing mannequin for TP motor insurance coverage doesn’t mirror the complexity and variety of highway dangers in at present’s world. De-tariffing presents a possibility to realign pricing with real-world driving patterns and societal aims.
It’s a step in the direction of making roads safer, insurance coverage extra personalised, and the system extra environment friendly for all stakeholders.
It is time to make insurance coverage smarter, not solely by way of expertise, but in addition by way of function, the place those that drive safely pay much less and the advantages ripple throughout society as a complete.
(The writer, Dr. Tapan Singhel is MD & CEO at Bajaj Allianz Common Insurance coverage)
(Disclaimer: Suggestions, ideas, views, and opinions given by consultants are their very own. These don’t symbolize the views of the Financial Occasions)
