Introduction

The post pandemic recovery witnessed a steep rise in automobile sales across the country. A 5% rise was reported in car sales  for the month of January 2021 itself, as people are leaning towards personal mobility as a precaution in the post COVID regime. This steep rise in motor sales is also anticipated to lead to a concomitant rise in the motor insurance industry which remained tepid during the pandemic.

According to data released by the IRDAI in 2018, Motor insurance is the biggest non-life insurance contributor to the general insurance industry in India. The sector accounts for nearly 39.4% of overall non-life insurance premiums. With the dramatic onslaught of events witnessed in the past year, we look at the emerging trends that could drive the sector in the coming year.

1. A rise in Insurance premiums

A drop in motor insurance premiums was seen in 2020 with premiums dropping by 15.73%  between the months of April and August. This was because there were fewer vehicles plying on the road due to the lockdown which consequently resulted in fewer claims being filed. Due to this reason, it is believed that insurance companies passed on this benefit to their consumers and citizens could see a respite from high motor insurance premiums. However, this fall is expected to be temporary and insurance premiums could rise as the global economy resumes it’s operations.

2. Rise in On-demand and customised Pay As You Drive (PAYD) Insurance 

It is estimated that there is a growing demand for novel insurance products which allow one to switch-on and switch-off their insurance as per their requirement. Many car owners also want insurance to cover them as per their usage. As an answer to this, usage-based car insurance has been approved by the IRDAI which allows car owners to insure their vehicles for kilometres they tend to drive instead of paying a general one-size-fits-all amount for the entire year. The Bajaj Allianz Car Insurance available on Finserv MARKETS allows you to install a telematics device called the Bajaj Allianz DriveSmart Service which monitors your car’s condition and keeps you updated on it. You can use this personalised car information to select adequate motor insurance as per your needs.

3. Use of blockchain to enhance car insurance

In simple terms, a blockchain is a secure and decentralized ledger that can track and record digital transactions. Car insurance companies are looking to track claims by looking at such a common ledger, making it easier to track and monitor driver demographics and behaviour, even amongst competing parties. This would mean that the probability of a fraud would be drastically reduced and hence, the benefits of the reduced risk would eventually be passed onto us.

4.Digital and personalised motor insurance

If there is anything that the pandemic has taught the global economy,  is to value the digital systems and enhance them in place. The motor insurance industry which has been functioning in a ‘phygital’ form is slowly looking to transition into a completely digital industry. Many motor insurance providers are already transitioning effectively. The Bajaj Car Insurance available on Finserv MARKETS allows you to apply, renew and file claims for the insurance online from the comfort of your homes.

Conclusion

Considering the dramatic onslaught of events witnessed over the past year, the automobile sector is all set to revamp itself. Various emerging trends such as the significant rise in the demand for Pay As You Drive Insurance model and the use of blockchain technology in the western markets would also reflect in the Indian automobile insurance sector over the coming months. The emphasis on a digital infrastructure over the past year has already paved the way for a completely digital insurance system and is expected to boost in terms of functionality from here on.