Motor insurance: Taking steps to prevent and minimise loss

The Insurance Information Bureau of India (IIBI) has been providing claims search functionality with wide usage among industry, with hits crossing the one-crore mark in FY20 helping in substantial savings for the industry.

In order to reduce loss ratios in general insurance, especially in motor insurance, a working group of the insurance regulator has recommended setting up a not-for-profit organisation which will promote safety and loss prevention.

The 10-member working group of Insurance Regulatory and Development Authority of India (Irdai), which was set up in December 2019, has underlined that it would be in the interest of both the insurer and the insured to ensure that losses are prevented in the first place and should losses occur, the insured take immediate steps to minimise it. This report said this proposed body, to be promoted by Irdai as the industry, should initially work in the areas of property and motor insurance.

“Loss prevention and minimisation activities are part and parcel of what the insurers do, as it helps improve their claims experience in various ways. Starting from risk assessment to payment of claims under a policy, insurers seek to take steps to prevent and minimise losses. They take the help of experts to carry out risk assessment wherever required and suggest risk improvements,” the report says.

Loss prevention in motor insurance
The report has highlighted that the body should map high exposure accident spots across the country by collaborating with police and insurers for road safety campaigns. It should organise safe driving training programmes and collaborate with automobile manufacturers on better safety aspects in vehicles and collaborating with insurers and police to reduce stolen vehicles and quick recovery of and disposal of stolen vehicles.

In motor insurance, surveyors and investigators play an important role in loss control, minimise fraud and control inflated claims. The report says the findings shared by surveyors need to be captured and analysed. At present, each insurer has its own approach to data analytics with limited data available in silos.

The Insurance Information Bureau of India (IIBI) has been providing claims search functionality with wide usage among industry, with hits crossing the one-crore mark in FY20 helping in substantial savings for the industry. “However, enriching the claims data available in the repository with better quality data as well as speedier submission will help the industry further—there are still instances of dependence on the insured’s declaration to reckon no claim bonus,” the report says.

The report has suggested linking motor insurance premium to traffic offences and identifying uninsured vehicles and following it up with state enforcement agencies towards ensuring that more vehicles are insured.

Use of telematics

The report says telematics is yet to be popularised. In telematics, motor insurance can be based on data on driving habits of customers like speed at which it is being driven, distance travelled and usage of the car captured through a GPS-enabled device fitted inside your car. Based on the data, insurers can determine the risk profile of the customer and tweak the motor insurance premium accordingly. Telematics can be used for real-time navigation, roadside assistance, and vehicle tracking.

In fact, telematics will help insurers in better segmentation of customers by assessing risks accurately. It will also help insurers estimate accident damage more accurately and reduce fraud claims by analysing driving data.

Garage Network Master

The working group has suggested setting up a Garage Network Master for standardising the vehicle repair cost. It will provide the average repair costs of each part, average painting costs and average turnaround times for each type of repair which can be accessed by the industry for ready comparison. The repairers can be graded on the basis of their performance and low-ranking garage personnel can be involved in orientation and training activities to enhance their skills and knowledge. Black listing of suspicious garages can be done by collaborating with IIBI and the General Insurance Council,” the report says.