IRDAI Creates Opportunity For Telematics Insurance

This article explores how telematics insurance can make motor vehicle insurance more efficient and suggests risk-based data privacy protections.

While taking an insurance policy in 1933, Dunn knew that her husband (who was going to use her car) was a dangerous driver. Yet, she hid this fact from her insurance company. A few years later, her husband crashed the car. The company dishonored the claim because Dunn hid an important fact – the driver's behavior.

But is the driver's behavior relevant? In India, it's not. Car insurance premiums are usually based on the car's features like engine capacity etc. But things are about to change. IRDAI has permitted general insurance companies to introduce three tech-enabled concepts for motor vehicles' Own Damage cover. The most interesting one is 'Pay How You Drive' (PHYD) cover. Here, the driver's behavior is considered while deciding the premium. For e.g., Mr. Ace Driver is charged less premium because he drives within