More than one out of every three customers chooses the Pay As You Drive (PAYD) motor insurance scheme, according to PolicyBazaar.
Three out of four customers renew their Pay As You Drive (PAYD) policies, signifying a major shift towards personalised motor insurance coverage, the online insurance broker says.
A recent data analysis by Policybazaar, based on the policies sold in the financial year 2024, reveals that 30 to 50% of customers purchasing car or motor insurance opt for Pay As You Drive (PAYD) option. Moreover, three out of four customers have opted for updating their PAYD policies, which reaffirms satisfaction and trust in this innovative insurance perspective, it says.
The Insurance Regulatory and Development Authority of India (IRDAI) permitted general insurance companies to introduce tech-enabled concepts like “pay as you drive” and “pay how you drive” for motor insurance cover in 2022. “The concept of motor Insurance is constantly evolving. 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 insurance regulator had said at the time.
“Comparing the current quarter with the previous quarter of 2024, there has been a surprising 45% increase in Pay As You Drive (PAYD) bookings, indicating a growing appeal for these flexible schemes,” says Nitin Kumar, head - Motor Insurance, Policybazaar.
Additionally, 10 to 15% of policyholders have chosen top-up services to extend the distance slab limit for their PAYD plans, indicating a growing interest in tailoring coverage to individual needs. The top contributing models contributing to 65% of PAYD bookings include popular vehicles like Maruti Baleno, Swift, and Hyundai i20, reflecting a diverse customer base.
In terms of bookings, the top PAYD bookings was for hatchbacks at 50%, followed by SUVs at around 30%, and sedans at 18%. Nitin Kumar highlights some key reasons for customers opting for PAYD plans, including limited usage of their cars for short- distance travel (60 to 70%), Second car owners or have multiple cars (15 to 25%), and remote work arrangements (10 to 15%).
Notably, a significant 34 to 35% share of PAYD booking in Tier-1, Tier-2, and Tier-3 cities on a large scale, without geographical bias, underscores widespread adoption, says Policybazaar.
“Also, Tier-2 and Tier-3 cities contribute significantly to PAYD bookings, notably from states like Uttar Pradesh, Jharkhand, Telangana, and others, accounting for up to 65%, showcasing nationwide alignment with this innovative insurance model,” it says.
“Also, it has been noticed that among different slabs in PAYD plans, the 5000-6000 KM option emerges as the most popular, chosen by 45% of policyholders, followed by 2000-4000 KM (20%), 8000-10000 KM (20%) and 6000-8000 KM (15%),” the report adds.
