Conventional auto insurance policies are currently unfair to low mileage and safer drivers as they end up subsidising riskier and high mileage drivers. Car owners and drivers look for a different insurance scheme under which they can pay the premium to the extent they use the vehicle. Just like mobile phone service operators offering different tariff plans based on the usage patterns of consumers, car users feel that insurance companies should offer products with variable premiums based on the distance the user drives and the risk involved.

Keeping this in mind, Future Generali, a joint venture between the India-based Future Group and the Italy-based Generali group, is planning to come out with a unique insurance product “Pay As You Motor Insurance (PAYM)” which will charge people for their insurance cover based solely on their individual driving habits. The company has partnered Logica, a business and technology service company based in the U.K. In an interaction through a conference call with The Hindu, K. G. Krishnamoorthy, Managing Director and CEO, Future Generali India, said this use-based car insurance product would be helpful to individuals who do not use their car very much. At present, these types of products were not available and Future Generali India feels that these would be useful for low-income drivers and families owning multiple cars with members possessing different risk perceptions.

Joining the conference call, G. B. S. Bindra, Global Innovation Director at Logica, said the company had come out with an insurance offering “Crimson” which will calculate the premium dynamically, using the data from an onboard device that gives real time data on vehicle usage. The users can purchase insurance based on a specific number of kilometres, very similar to a prepaid phone recharge card. They get periodic updates and reminders on their mobile phones through SMS texts regarding their premiums. The insurance coverage expires once the vehicle has travelled the specified number of miles. The users can then renew the insurance by paying premium, even while on the move, either via SMS or online. Mr. Bindra said Logica was running a pilot project in Mumbai, Chennai, Bangalore and New Delhi.

Once the project was successful it would be launched commercially, he said.

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