Despite the hype about telematics, the technology in India is unlikely to have a major impact on pricing, says Mr Kamesh Goyal, Chairman of the online non-life insurer, Digit Insurance, which was granted an operating licence last month.
He told Mint Money that one reason for the lack of significant impact is that motor compulsory third-party liability premiums are fixed by the regulator. At the same time, own-damage premiums are falling because of no-claim bonuses or lower values as cars get older.
Secondly, high-end cars in India are driven by chauffeurs. Thirdly, Indians have a culture in that a car is driven by more than one person. “So it will be difficult for telematics system to recognise any one driving behaviour. Also, in telematics, where you drive is more important than how you drive,” he said.
Lastly, typically, a telematics device is priced between INR2,500 (US$38.20) and INR3,000. Mr Goyal asked: “Who will fund this device? If insurance companies give out the device themselves and also give a discount in future, how will they fund it? And why would a customer buy it for INR3,000 for a possible reduction of premium of INR3,000 over three years? This is again one of the things that people are talking about.”
He added: “I do not know of any country in the world where more than 5% of the cars have telematics. Telematics has been around for more than 10 years now. I am not being biased, I am just sharing my understanding. If you ask any insurance company that offers telematics, they will be reluctant to tell you how many cars have that system, because the number will be very low.”