Your job will drive auto insurance cover premium

If you are a chartered accountant or a doctor and you are buying a new vehicle , chances are that you would be paying a smaller premium on your vehicle policy compared to a marketing professional or a businessman. This is because physicians and chartered accountants are categorized as a low-risk group by insurers as they travel less frequently on roads than sales executives or other self-employed professionals.

“Occupation is increasingly being considered in risk analysis and premium rating along with other important factors like age, average mileage , parking conditions and previous accident history,” said managing director of Royal Sundaram Alliance Insurance Company Ajay Bimbhet. Pricing in motor insurance has gone in for a sea change in the last five years. Prior to de-tariffing (where prices are market-driven ) in 2007, the main factors governing motor insurance premium pricing was the year of manufacture of the vehicle, engine capacity, price and the zone in which the vehicle was bought. While these four factors continue to play a role in determining the insurance premium , other factors such as occupation are also playing an important role in determining the pricing of the motor cover. “We are seeing the emergence of differential premium pricing with respect to profession. Insurers are giving positive rating for some professions. This is translating to a discount of 5% on tariff premiums,” said Rahul Aggarwal of insurance advisory Optima Insurance Brokers.

Gender also has a role to play. So, if you are a woman CA or doctor and your work involves just going to the clinic/ office and coming back, you will end up paying a smaller premium than a male businessman who resides in the same city and drives the same make as you do. That’s because women are considered safer drivers and less rash on roads than their male counterparts. “There is a differential pricing in motor insurance, and usage of the vehicle on roads and occupation are becoming important factors in determining it,” a senior official from United India Insurance said.

Motor premiums contribute to nearly 40% of general insurance premium collected by insurers. “The contribution of motor is significant to a company’s top line as well as bottom line. This has resulted in a lot of pricing sophistication in this line of business,” head of the actuarial department at Bajaj Allianz General Insurance , Anurag Rastogi, said. For the first half of FY13, motor insurance contributed 57% to Bajaj Allianz’s business. “A lot of segmentation is happening in the motor insurance space. Companies want to have a profitable set of customers . They are doing so by loading customers who are bound to give more losses and discounts to people who are giving profits,” Aggarwal said.

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