Page 17 - Insurance Times February 2023

Within the rapidly growing usage-based for the insurance would only cover the amount the customer
is expected to use the car for. Customers may also add
pricing
additional kilometres to their initial purchase over the policy's
Customers know the benefit of dealing with providers who duration. Only if the paid Kilometres (or additional grace
adopt a usage-based pricing model: use the items only when Kilometres provided to the customer) are still being used at
necessary and only pay for what you actually use. the time of the loss will this Add-coverage be deemed in
effect.
Even in the software business, SaaS suppliers are abandoning
traditional subscription pricing in favour of usage-based The premium amount under the second Add-on PHYU would
models that more accurately represent current consumer vary depending on the driving behaviour score. Customers
purchasing trends and the value that their products give. who exhibit safe driving practices qualify for substantial
UBP, also known as consumption-based pricing, associates savings off the policy's base cost. By disincentivising bad
a customer's payment with the amount of a given good or driving behaviour, this policy would encourage the
service that they use. development of good driving habits while rewarding
excellent driving behaviour.
Despite the fact that the insurance sector has a long history
of creating new, exciting markets based on emerging risks
Should I be mindful of anything before
and consumer demands, it is not frequently viewed as a
shelter for innovation. Although the sector as a whole has purchasing the add-ons?
developed pockets of innovation in India, few insurers have The insured shall ensure that the miles were driven and
actively promoted innovation. other driving-related criteria are easily determinable at any
point during the policy's term or during the time of a claim,
Due to rising customer expectations, low-interest rates, and whether via technology, readings in the vehicle's devices
fresh competition, insurers are under pressure today to take (such as the odometer), or any other available method. Any
a more deliberate approach. For instance, the Insurance tampering with these tools or readings renders the add-ons
Regulatory and Development Authority of India (IRDAI) worthless and may result in claim denial.
modified the "use and file" procedure for all health insurance
products and the majority of general insurance products Also, if the policy is renewed within 30 days of expiration,
under fire, motor, marine, and engineering. the maximum amount of kilometres that can be carried
forward in the case of ICICI Lombard is 1000. After 30 days
The Use and File approach essentially allows insurers to from the renewal deadline, unused mileage cannot be
launch their products on the market after filing with the carried forward. Additionally, the Insured may select any
regulator, eliminating a longer waiting period and enabling available Kilometres range according to his or her needs.
them to provide customers with cutting-edge insurance At any moment during the policy duration, Insured may top
solutions to better handle the changing insurance industry.

Implications for Buyers
The new motor insurance regulations for private
automobiles and two-wheelers owned by individuals will
allow users to pay for insurance in accordance with their
automobile usage. This basically means that insurers will
allow customers to convert their base motor policy into an
'Asset cum Usage' policy, in which the premium charged for
the base motor vehicle insurance is determined in part by
usage.

Customers would choose to pick from a variety of
"Kilometres" under PAYU based on consumption. The price

16 January 2023 The Insurance Times