Insurance Outlook: Volume 4

Tech-innovations in the field of Motor Insurance: Awareness and Inclination of Car Owners

Motor insurance buying is incidental for first time car buyers and regulatory pre-requisite for successive renewals. Thus, involvement of customers in the purchase or renewal is low. This translates into moderate level of awareness about the policy and coverages. We reached out to 1000+ car owners with an active motor insurance policy in both Tier I and II cities in India and curated the responses in this volume of Insurance Outlook, which answers the following 3 questions:

1. How well do car owners understand their own Motor Insurance Policy and its coverages?
2. Have customers witnessed any digital transformation in the Motor Insurance space?
3. What is the best innovation based on the relevance of the options provided?

(Refer to the glossary: New or technical terms are defined in the glossary section at the end)

Awareness about motor insurance coverage and recent digital transformation

The understanding of the coverage and other major elements of motor insurance is crucial for its owners. The research reveals however, only approximately half of motor insurance owners are completely aware about their coverage. There isn’t any significant difference between the owners in Tier I and Tier II cities.

A lot of insurance providers have started talking about digital capabilities, innovation and AI recently. The ultimate objective is to enable customers to save their time and money. The survey reveals that 45% car insurance owners have witnessed an innovative offering or digital transformation in the motor insurance space. The awareness is being led by Tier I cities with 51%. However, this awareness has not translated into usage, as customers consider them very new and no one in their social group is advocating them.

Awareness and usage of major innovations

The chart shows moderate level of awareness regarding various innovations happening in the motor insurance field. On the other hand, actual usage of these new age innovations is found to be significantly low. Customers do not explore these options due to the low involvement in the insurance journey and ‘will use when we need’ attitude. Prime reason of low usage of PAYD (Pay As You Drive) is uncertainty of the vehicle run annually and apprehension about the next course of action in case of crossing the defined slab. Skepticism about accuracy of telematics device and no advocacy from social group are leading to very low usage of PHYD (Pay How You Drive).

What is the best innovation based on the relevance?

Customers look for convenience as far as relevance of these innovations and buying intention is concerned. Prime reason to rank ‘Automated Vehicle Damage Inspection’ first is customers’ belief that it will save a lot of time and would be easy to use with the help of mobile app. ‘Floater Policy’ is liked for its convenience in tracking the renewals and policy documents. Car owners like the idea of paying as per the usage under PAYD but find it too good to be true at the same time.

Innovative Suggestions

Customers mentioned that time has come for insurance companies to provide options to cover plastic parts and accessories (“let us choose like pizza toppings”). For better convenience, some customers mentioned that it would be innovative if there are bundled products (motor, life and health) and they get to choose as per the need. A few suggested that auto-debit option for renewal (post a quick confirmation on premium) would be great as they miss renewal sometimes. Monthly premium and voluntary insurance break & resume options are also cited as futuristic innovations.