January 18, 2016
The odd-even scheme for cars, if fully implemented, might lead to a reduction in motor insurance premiums in the near future, as risks would be cut when vehicles can ply only on alternate days, according to industry players. .
In a pilot run which started on 1 January in New Delhi, only cars with odd-numbered licence plates will be allowed on the roads on odd-numbered dates and those with even-numbered plates on the other days, except on Sundays when the rule does not apply. The pilot, which lasts till 15 January, is aimed at seeing how the odd-even scheme would work as the government tries to cut smog in the world’s most polluted capital. Mr Mukesh Kumar, Executive Director at HDFC ERGO General Insurance, said: “The cars would be out on the streets only for half the number of days than before. This may bring down the risks of accidents and there is a case for premium revisions downwards.” .
He added that comprehensive motor insurance cover might see a reduction in premiums, reported the Business Standard. Insurers offer own-damage and third party liability covers as a comprehensive cover. Mr K G Krishnamoorthy Rao, Managing Director & CEO of Future Generali India Insurance, said that over a period of time, there is a case for premiums to be revised based on data received, if there is a decline in the number of motor accidents. However, he did not rule out the possibility of speeding as there would be fewer vehicles on roads. A Supreme Court ban on the registration of large diesel vehicles in Delhi-National Capital Region might also have an impact on insurance. Mr Rao explained that with fewer such vehicles on the road, spreads would reduce, leading to an increase in average premiums. .
In a separate development, vehicle owners in the metropolises of Mumbai, New Delhi, Chennai and Kolkata may have to pay 15% higher premiums than those in other parts of the country as insurance companies believe the risk of insuring cars in big metros are higher after the Chennai floods last year, reported The Economic Times. “We will have to build in the factor of flood for all big cities that are developing fast and premiums should go up by 10-15%,” said Mr Vijay Kumar, head of motor insurance at Bajaj Allianz General Insurance. “After the Chennai experience, we know that the severity of claims is higher in metros, so there will be an increase in premiums,” said Mr SS Gopalaratnam, Managing Director & CEO of Cholamandalam MS. “We are trying to see if flood-related policy rates could be revised both in motor and property, because losses are higher by up to 10%.”