The Insurance Regulatory and Development Authority (IRDAI) wants motor insurance companies to offer additional options of “pay as you drive” and “pay as you go” as a first choice to the customer.
The IRDAI on Tuesday issued a master circular on General Insurance business repealing 13 circulars as part of reforms.
The regulator had 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.
Three out of four customers renew their Pay As You Drive (PAYD) policies, signifying a major shift towards personalised motor insurance coverage, according to PolicyBazaar. A recent data analysis by Policybazaar, based on the policies sold in the financial year 2024, revealed that 30 to 50% of customers purchasing car or motor insurance opt for Pay As You Drive (PAYD) option.
Additionally, 10-15% 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, PolicyBazaar said. The 5,000-6,000 kilometres option emerged as the most popular, chosen by 45% of policyholders, followed by 2,000-4,000 km (20%), 8,000-10,000 km (20%) and 6,000-8,000 km (15%). The top contributing models contributing to 65% of PAYD bookings include popular vehicles like Maruti Baleno, Swift, and Hyundai i20, as per PolicyBazaar.
In its master circular, the IRDAI says no claim shall be rejected for want of documents. Retail customer can cancel the policy anytime by informing the insurer. Insurer can cancel the policy only on grounds of established fraud. The insurer shall refund proportionate premium for the unexpired policy period on cancellation, it says.
Homeowners “fire” policy must have an option to choose add-on covers such as flood, cyclone, earthquake, landslide, rockslide, terrorism or to opt out from comprehensive fire and allied peril policy, says IRDAI.
“Review and reforms to enhance the insurance experience for all stakeholders is a continuous process. A regulatory environment which empowers the policyholders by bringing about transparency and fair treatment; empowers the stakeholders with ease of operations and facilitate quick adaptation to changing market dynamics is a significant step towards achieving a more inclusive, transparent and efficient insurance sector in India,” the insurance regulator says.
Provision of easy-to-understand insurance products tailored to meet individual needs of the customers, providing them with ample choices and enhancing their insurance experience has now been enabled, says IRDAI. The shift from rule based to principle-based regulatory framework facilitates ease of doing business and encourages innovation, enabling reduction in the response time for emerging market needs, it says.
