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: Why should my car insurance premium pay for the claims of other motor owners? Insurance is, after all, a pool. Particularly when I have not had any claims from the inception of my policy? Why should I lose my No Claim Bonus (NCB) for an accident that was for no fault of mine?
I drive my car myself and have a garage to park. Why should I be charged the same premium as a driver-driven car that has a roadside parking?
Yes, there should be a carrot and stick approach. The errant should pay more than the ones with a good track record. Despite the pooling, there has to be some equity. That is what de-tariffing is all about — a market in which car insurance would be priced according to its specific risk profile. Each insurer could have a unique product, with difference-in-conditions and limits. There could be a common basic cover and a laundry list of add-ons.
Currently, there is a knock-for-knock agreement between various insurers. Thanks to the tariff, two cars insured by two different insurers claim, in the event of a collision (irrespective of fault), from their respective insurers. All this could change. A ‘lesser cover’ policyholder may be forced to claim the difference between what is payable and what is incurred, from the insurer of the defaulting driver.
What has happened in the telecom, airlines and auto business will also happen in auto insurance. Prices are expected to go down for private car owners, in the short term. But there will be hard and soft cycles. Exiting the discomforts of a tariff may not always entail cruise control.
The writer is general manager, Bajaj Allianz General Insurance. These are his personal views
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