IRDAI has permitted general insurance companies to introduce tech-enabled concepts for the Motor Own Damage (OD) cover in order to offer customers usage-based insurance covers as add-ons to the basic policies of Motor OD.
Issuing a circular, the regulator said the concept of motor insurance is constantly evolving and as a step towards facilitating technology enabled covers, it is allowing the general insurers to bring in sophisticated addons such as– “Pay as You Drive” and “Pay How You Drive”– to Motor Own Damage policy. The regulator has also allowed the insurers to introduce floater policy for vehicles belonging to the same individual owner for two-wheelers and private cars. This circular will come into effect immediately.
“Introduction of the above options will aid in giving the much needed fillip to Motor OD Insurance in the country and increase its penetration,” IRDAI said in a release.
According to general insurance industry insiders, introduction of add-ons covers like “Pay as You Drive” and “Pay How You Drive” will nudge customers towards a utility based “Pay as you Use” model, lending greater flexibility and convenience in customer choice. Moreover, the usage-based covers as an add-on to an OD policy will give additional protection for those customers who have a lesser frequency of vehicle usage.