Insurance premium for diesel vehicles, hybrid cars or even those which have been fitted with CNG (compressed natural gas) after purchase could go up by 20-30 per cent.
General insurance companies, which have been facing mounting losses due to the substantially high claims ratio in automotive insurance, are planning to take the fuel element also into consideration while computing the premium.
Motor claims ratio is about 75 per cent of the insured amount for the industry and the claims ratio in third party motor insurance is as high as 180 per cent.
“The age of the car, fuel type, the model and make of the car will be some of the key determinants for the price factor,” said Dr Amarnath Ananthanarayanan, Chief Executive Officer and Managing Director, Bharti AXA General Insurance. A hybrid vehicle with a twin engine could attract a higher premium, while that with an in-built CNG might call for a lower premium,” he pointed out.
ICICI Lombard has already started factoring in the fuel element (whether the vehicle is diesel or petrol driven) of the vehicle while computing the premium. “Diesel vehicle is generally used by people travelling long distances, thereby heightening risks.
So this fiscal we have started pricing in the fuel factor of the vehicle. On an average, there could be a 15 per cent loading on premium compared with petrol cars,” said Mr Amitabh Jain, Vice-President-Customer Service Motor, ICICI Lombard.
Companies also plan to factor in features such as location, model and age of the vehicle, age of the driver, usage of the vehicle and the miles driven. “These are, however, part of an initial concept. Data capturing is of critical importance in the implementation of the concept. But the way the market is evolving, it looks like some of these factors will soon be put in place,” Mr Jain said.
ICICI Lombard, Mr Jain said, was also in the process of creating a database for some of these factors.