INDIA : Telematics-based insurance takes a big hit due to lack of data protection, IRDA’s fixed pricing laws

Insurers say that they can frame pricing policies using granular data to cater to the customer’s needs, while charging premiums on how the vehicle is being driven. Photo: Mint

Bengaluru: Online insurance start-ups, which are trying to use customer data from vehicle trackers and wearable devices, have hit a blockade due to lack of regulatory oversight on premium pricing and data protection.

Currently, insurers operating in the motor insurance segment depend on vehicular data, such as engine displacement, capacity of the vehicle, miles driven and age of the vehicle, to price premiums.

Despite motor insurance being mandatory in the country, the segment’s losses are significantly growing every year. According to a Moneycontrol report, motor insurance losses are expected to increase by 230% in FY19, from the current 140%.

Start-ups and traditional insurers are trying to cut losses by collecting granular data from customers, such as driving behaviour, kilometers driven and time taken for each trip, among others. Insurers say that they can frame pricing policies using granular data to cater to the customer’s needs, while charging premiums on how the vehicle is being driven.

But the Insurance Regulatory and Development Authority’s (IRDA) regulations on pricing of insurance products, high cost of tracking devices, and lack of well-defined data protection rules, are hindering development of digitised insurance products, according to legal and industry experts.

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