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Saturday, March 5, 2011

Insurance cos working on 'drive less pay less' policies

Drive less, pay less. That's going to be the selling point of at least three motor insurance companies . Modelled on the popular model followed in Italy, this policy lets you pay the premium according to the miles you drive. If you are not a frequent user of your vehicles, you get to pay less premium when your motor insurance policy comes up for renewal.

Bajaj Allianz, ICICI Lombard and Bharti AXA General Insurance are working on versions of the so-called pay-as-you-drive policies. ICICI Lombard has, in fact, initiated a pilot project under which it has installed tracking equipment on a set of vehicles - a mix of owner-driven and commercial.

The equipment are currently tracking data like distance traversed, condition of roads used, driving time - like day or night. "We started the pilot project some six months ago and are now collecting data. Once the volume of the data reaches a critical level we will engage our actuaries - persons who do all the mathematics while designing an insurance product, to design a 'pay-as-you-drive' policy," said Amitabh Jain, head motor customer services at ICICI Lombard.

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