Come 2007, general insurance industry will see a big changeover. Pricing, the range of cover, the level and degree of customisation and not to mention service standards will witness major changes as the Insurance Regulatory and Development Authority has laid down the roadmap to de-tariff the industry.
The regulator expects de-tariffing to take place by December 2006.
As a managing director, no longer will you pay the same premium as a 21-year graduate. Premium charges for motor insurance could depend not only on your age and experience as a driver, but also on your professional qualifications. Strange?
Well, not really, insurers are planning to segregate automobile buyers into various risk categories based on their educational qualifications. This helps to determine the magnitude of risk an individual is willing to take.
A graduate using his father's car may care little for it and drive rashly as compared with a physics professor who has come to value the good things in life.
Today, in the world of regulated pricing, as 70 per cent of all insurance products fall under the tariff regime, one auto insurance plan is hardly different from the other, except for the engine size of the car.
Once motor insurance sector is de-tariffed, even the make of the vehicle and the extent of its usage will make a difference in the amount of premium charged.
A cab owner definitely would have to pay more premium than a bank clerk who works from 9 to 5! After all, more than the car you drive, it is the driver who can cause accidents.
Hence, insurers tend to pay closer attention to such details like whether the motorist wears glasses or has health problems that could impair his judgement while driving.