IRDAI said its objective was to facilitate deeper motor own damage penetration in the country.
"The advent of technology has created a relentless pace for the insurance fraternity to rise up to interesting yet challenging demands of the millennials. The general insurance sector needs to keep pace with and adapt to the changing needs of the policyholders," the insurance regulator said in a circular.
"Introduction of the above options will aid in giving the much-needed fillip to motor own damage insurance in the country and increase its penetration."
The add-on plans approved for now are 'Pay-as-you-drive', 'Pay-how-you-drive' and single floater policy for a retail policyholder's multiple two-wheelers or cars. For instance, at present, the own damage premium is linked to vehicle age, make and model. But if you opt for 'Pay-as-you-drive', premiums could be linked to kilometres or duration for which the car has been in use. "It is a welcome move by the regulator, especially at a time when the pandemic has changed the way we work and travel. These add-on covers will appeal to customers who are working from home more often, thus making car insurance cost-effective for them," said Udayan Joshi, President, Underwriting and Reinsurance, Liberty General Insurance.
Car users who do not drive frequently will benefit as currently, they premiums linked to the age, the make or model of their vehicle. "With the new IRDAI guidelines, customers will benefit and will have control over the upfront insurance cost as the premium will be based on the kilometres driven by the vehicle," said Ashwini Dubey, Head, Motor Insurance Renewals, Policybazaar.com. It will also help insurers assess the risks better.
"It is also good for the insurers to identify their liabilities, a person who drives his car more frequently is more exposed to the risk of accident and has a higher chance of insurance claim than the one who drives less," he added.
A motor floater add-on will let you cover your multiple vehicles under a single cover. You can switch this on or off, depending on your requirements. So, you can choose the vehicle to be insured by intimating the insurance company every time you use it. This could mean lower premiums for policyholders who own more than one vehicle.
However, the features and offerings of new add-ons will be clear only after insurance companies roll out their products in the days to come.
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