Private general insurers have stepped up premiums by 10-15 per cent for luxury cars whose owners have shown a propensity to making high claims. However, premiums for other cars remain where they were.
The premium for the first renewal of cover for a BMW 5 series insured with Bharti Axa for Rs 40 lakh was Rs 64,056 in Â September last year. Today it is Rs 71,401.
The premium for a BMW X1 insured for Rs 28 lakh was Rs 45,834; now it is Rs 50,993. Similarly, for an Audi A6 with an insured Â value of Rs 40 lakh the premium was Rs 64,056 a year ago; today it is Rs 71,401.
A Mercedes E class with an insured value of Rs 60 lakh required an insurance premium of Rs 94,427 last year; this year it is Rs Â 1,05,415.
Only in the case of a BMW 7 series car, valued at Rs 1 crore, the premium remains at Rs 1,73,000.
In contrast, the first-renewal premium for a Hyundai i20 has stayed constant at Rs 13,602.
â€œInsurers have been seeing a higher claims ratio in the luxury segment. This has pushed up the premium for luxury cars by 10 to 15 per cent,â€ said K G Krishnamoorthy Rao, managing director and CEO of Future Generali India.
Luxury cars, i.e. cars costing above Rs 25 lakh, are a rapidly growing segment, gaining 50 per cent annually.
â€œDepending on individual insurerâ€™s claim experience, the premium rates are changed. In the past few months the rupee has been under pressure; this has increased cost of imported spares and repairs of luxury cars,â€ explains Arvind Laddha, CEO of Vantage Insurance Brokers.
Experts say bad Indian roads could be one reason for claims going up.
A R Sekar, officiating CMD of New India Assurance, said, â€œPremium is a function of claim experience of an insurance company; as the insurer witnesses a rise in claim in any segment, the premium goes up.â€
In 2007 the insurance regulator had freed motor insurance tariff, letting insurers fix their own premiums as per their claim experience and market factors. However, the regulator still regulates third-party insurance premium.
â€œMotor insurance is still evolving. Earlier, because of lack of data and price competition, premiums were low. But now, insurers analyse their claims database; thus premiums have gone up. So far the claim experience has not been favourable and another increase in premiums can be expected in a few in months,â€ said Vijay Kumar, head of motor insurance of Bajaj Allianz.
At the time of registering a claim, policyholders generally see if the no-claim bonus (NCB) or the claim made will be better for them financially.
â€œIn most cases the claim amount is higher than NCB, so the policyholder goes in for making a claim. Moreover, luxury cars use a lot of sophisticated and interconnected devices. So even for a small problem a whole device may need replacement,â€ according to K N Murali, senior vice-president and head of motor vertical of Bharti Axa.
The rapid growth of the luxury car segment has created good volumes for insurers. â€œOur market analysis shows the luxury car user profile has changed drastically. Earlier these cars were chauffeur driven; now even youngsters drive them, which adversely affects claims,â€ said Amitabh Jain head of motor customer service of ICICI Lombard.