Loganathan, Y. and Easwaran, V., "The Rising Need for Usage Based Insurance using Telematics in Indian Commercial Vehicles," SAE Technical Paper 2013-01-2779, 2013, doi:10.4271/2013-01-2779.
General insurance industry has been incurring losses due to their poor underwriting standards and fake third party motor insurance claims. Motor industry accounts for one third of the non-life industry premium. The problems associated with the motor insurance industry are being assessed here with the help of indicators claims ratio, solvency ratio. The steps taken by Insurance Regulatory and Development Authority (IRDA) have been in terms of declined risk pool and increase in Third party premium. Third party premium is calculated based on the past years claim data and a differential pricing mechanism have been adopted. Though different vehicle segments have been addressed by this approach, the individual customer needs are not addressed here. The next level of differentiation should be based on user behavior and insurance companies are now looking at rate differentiation using customer behavior. Usage Based Insurance (UBI) using telematics is being adopted in many countries, to address the customer needs. ‘Pay as your drive’ and ‘Pay how you drive’ programs are becoming popular. The insurance best practices are being adopted in the Indian Insurance industry, and hence the usage based insurance concept. This paper focuses on the increasing need for insurance telematics in Indian commercial vehicles. The need for regulations, the benefits to different stakeholders - commercial vehicle OEMs, Insurers, and Customers are also discussed in this paper.