Overview

The press release explains how motor insurance pricing in India is moving from broad, category‑based tariffs to highly personalised premiums that reflect the specific vehicle and driver characteristics. The shift is underpinned by regulatory changes, industry performance pressures, and advances in data‑driven underwriting.

Regulatory Foundations

In July 2022, the Insurance Regulatory and Development Authority of India (IRDAI) authorised general insurers to launch technology‑enabled options for motor own‑damage cover, notably “pay‑as‑you‑drive” and “pay‑how‑you‑drive”. Subsequent use‑and‑file and regulatory‑sandbox reforms have shortened product‑to‑market timelines, allowing insurers to introduce differentiated pricing models more rapidly.

Industry Context and Financial Pressures

According to a Boston Consulting Group analysis, the Indian general insurance industry closed FY 2026 with gross direct premium income of ₹3.36 lakh crore, representing a 9 % year‑on‑year increase. The motor insurance segment contributed close to a 9 % growth rate, even though overall auto sales rose 10.4 %, indicating that renewal‑heavy portfolios limited the pass‑through of new‑car price gains. The same analysis noted that the industry’s combined ratio rose to 113 %, meaning insurers were paying out more in claims and expenses than they collected in premiums before any investment income, thereby constraining the ability to grow through blanket discounting.

Drivers of Personalised Pricing

The move to precision pricing is presented as a margin‑discipline tool that rewards low‑risk drivers. Key variables that now move a quote include:

  • Insured Declared Value (IDV) – the maximum payout for own‑damage; a lower IDV reduces the premium but also caps the claim amount.
  • No Claim Bonus (NCB) – increases with each claim‑free year, reaching up to 50 % after five consecutive claim‑free years, applied only to the own‑damage portion.
  • Voluntary Deductible – a higher self‑borne amount lowers the premium while raising out‑of‑pocket costs at claim.
  • Geographic Zone – reflects local accident, theft and catastrophe experience.
  • Add‑ons Selected – such as zero depreciation, engine protection and consumables, each carrying a separate cost.
  • Declared Usage or Driving Data – under pay‑as‑you‑drive and pay‑how‑you‑drive options, mileage and driving behaviour (speed, braking, trip timing) feed directly into pricing.

Quote versus Estimate

An online estimate is an indicative figure generated before underwriting inputs are confirmed, whereas a quote is a priced offer tied to a specific IDV, NCB level and add‑on list. The release advises that meaningful comparison across insurers requires holding these three variables constant; varying any of them invalidates the comparison. It also warns that an overstated NCB—often due to mismatched records from a previous insurer—can cause a premium to be revised upward after issuance.

Data Privacy Considerations

Behaviour‑linked pricing relies on personal data, including telematics inputs such as location, speed, braking and trip timing, which fall under the Digital Personal Data Protection Act. Consent must be specific and informed, and customers have the right to know what data is collected, its retention period, and how it influences the premium.

Industry Commentary

Subhasree Nigamma, Head – Reserving, Motor Pricing and Analytics at Royal Sundaram, is quoted: “Personalisation only earns trust if it is decipherable. If a customer cannot see which factor moved their premium, a lower price feels like luck and a higher one feels like a penalty. Transparency is not a compliance exercise here. It is the product.”

Practical Takeaway for Consumers

The quote is becoming negotiable through input adjustments rather than traditional haggling. Car owners can influence the premium by:

  • Reviewing and possibly lowering the IDV.
  • Protecting the NCB by absorbing small repairs instead of claiming.
  • Selecting an appropriate voluntary deductible.
  • Declaring realistic annual mileage when using usage‑based options.

Royal Sundaram, among other insurers, now allows customers to adjust IDV, deductible and add‑ons on its online platform, making the trade‑offs visible before purchase rather than after a claim.

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Disclaimer: The above press release is provided under an arrangement with NRDPL. PTI takes no editorial responsibility for the content.