The demand for Pay as You Drive (PAYD) plans in motor insurance increased by 25 per cent among its largest customer base—hybrid workers—on the back of favourable regulatory guidelines.
In the master circular issued in June, the Insurance Regulatory and Development Authority of India (Irdai) had asked insurers to offer additional options like pay as you drive (PAYD) and “pay as you go” as a first choice to the customer.
According to a recent study by Policybazaar, hybrid or Work from Home (WFH) owners, which account for 35 per cent of the PAYD market, have seen a 25 per cent rise in demand for such plans from last year. At the same time, households with multiple cars have seen a 50 per cent surge in demand for PAYD from the year-ago period. Homemakers, accounting for 15 per cent of the PAYD customers, saw a 30 per cent increase in demand.
“IRDAI’s latest guideline asking insurers to offer PAYD plans as the first choice to customers is a welcome move that is poised to significantly boost PAYD adoption. This initiative will usher in a new era of customised insurance, making motor insurance a more personalised and customer-centric offering,” Policybazaar said.
As per the study, there is an increase in preference for add-ons including Zero Depreciation Cover, Consumable Cover, Engine Protector, and Return to Invoice Cover among the customers. These choices emphasise the importance of vehicle value maintenance.
The insurance regulator had allowed general insurers to introduce pay as you drive and pay how you drive for motor insurance cover in 2022.
On Tuesday, Zuno General Insurance launched a “Pay How You Drive (PHYD)” add-on coverage option for customers which will link the ‘driving behaviour’ of customers to their vehicle insurance premium.
The new add-on coverage is available on private car packages and private car standalone own damage (OD) policies for customers. This option will enable users to assess their driving skills and get a “Zuno Driving Quotient” and earn rewards for driving safely. The insurer will encourage the behaviour by offering discounts of up to 30 per cent on insurance renewal premiums with PHYD, and this add-on feature will be available across distribution channels of the company.
“This (Pay How You Drive) will also give customers greater control over their insurance pricing, personalising it, which will be a departure from the current pricing approach,” said Shanai Ghosh, MD and CEO, Zuno General Insurance.
“…Amid the surge in natural calamities, there has also been an increase in demand for engine protection in certain regions by our policyholders,” Ghosh added.
First Published: Aug 06 2024 | 7:33 PM IST
