Private insurer Digit General Insurance has announced the launch of ‘Pay-as-you-drive’ add-on feature to its motor insurance product portfolio.
It will allow vehicle-owners with low usage to earn a discount of up to 25 percent on annual premiums. Vehicle-owners can purchase this benefit as part of comprehensive coverage, along with motor own damage (OD) policies.
IRDAI’s approval for ‘innovative’ add-ons
This comes close on the heels of the Insurance Regulatory and Development Authority of India’s (IRDAI) decision to allow insurers to offer novel products. The insurance regulator had, on July 6, allowed general insurance companies to offer new, add-on covers along with motor policies' own damage component. That is, you can buy these optional covers along with your base policy by paying an additional premium.
IRDAI granted initial approval to add-on concepts such as 'Pay-as-you-drive', 'Pay-how-you-drive' and single floater policy for a retail policyholder's multiple two-wheelers or cars.
"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 general insurance sector needs to keep pace with and adapt to the changing needs of the policyholders," the insurance regulator said in a circular. "Introduction (of these options) will aid in giving the much-needed fillip to motor own damage insurance in the country and increase its penetration."
Discount of up to 25 percent
Digit’s new add-on offers discounts to its customers driving less than 10,000 kilometres per year on an average from the time it was bought by the current owner from the showroom. The company will use odometer reading, telematics data and annual kilometre opted to offer this discount, which can go up to 25 percent.“This is especially beneficial to people who do not drive their car regularly but still pay the same premium as a driver with heavy usage. This trend is seen among many metro and tier-1 city dwellers, where they use public conveyance or on-demand cabs over their own vehicle for daily commute. People with multiple vehicles and retired individuals with less requirement of their car, too, will benefit from this,” Digit Insurance said in a media release.