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Placing a premium on service

Placing a premium on service

In the future, one would be in a position to tailor the policy to his specific needs.

Swaraj Krishnan

The de-tariffing of motor insurance, along with that for fire and engineering, took place two years ago. During this period, we have seen a downward movement in premium rates, which was anticipated to a large extent. The Indian market had witnessed a similar situation when the marine market was freed of pricing controls in 1991. To maintain the same quantum of revenues would, therefore, mean writing a larger number of risks at lower prices. But this model of maintaining market share has its own pitfalls, namely, accumulation and sudden unforeseen exposure on the balance sheet. This is expected for some time till the market moves to a risk-based pricing model.

In India, de-tariffing is, at present, partial to the extent that coverage parameters have not been completely opened up for customisation. The freedom to price a cover should be viewed in this context. Insurance, probably, remains the best form of protection against uncertainties that lead to financial losses. Covers and cost are, therefore, dependent on an individual’s perception of risk and a fair estimate of the propensity to loss. In the future, an individual would possibly be in a position to tailor the policy to his needs. This would complicate both the sale and purchase of insurance.

New Products
The insurance regulator has recently permitted ‘add-on covers’. These primarily enhance or amend the existing standard coverage. The industry is pinning its hope on addons because of the belief that they can be growth triggers in the future. Some possible covers are:

Road-side assistance: This is a motor insurance cover that will help you if your vehicle breaks down.

Depreciation waiver: Anomalies in terms and conditions governing the depreciation of parts is a major irritant in motor insurance claims. While Bajaj Allianz has ensured some transparency by issuing a ‘claims assessment calculation’ sheet, a cover that waives depreciation completely will be more beneficial to the customer. Vehicle replacement: This is a cover that offers a new vehicle of the same make and model if the insured vehicle is stolen. This would include applicable taxes and charges, such as road tax and registration charges.

Emphasis on Service
Over the past couple of years, we have seen improvements in the service delivery standards. The customers have become more discerning in their choice of service providers, placing more emphasis on speed and the courtesy with which a contract is fulfilled. Service, not price, will be the key differentiator in the market. In keeping with this trend, insurers are using technology to extend their services. Some of our innovative services include:

SMS alerts: On registering a motor claim with Bajaj Allianz, the customer receives a chain of SMS alerts updating him on the claim status till the final cheque is dispatched.

On-the-spot assessment: Our team visits the customer, not the other way around, thus reducing the hassles of getting claims assessed. Home visit: This is a service for senior citizens for pre-policy medical check-up and diagnostics.

In-house claim settlement: To lower the turnaround time in settling hospitalisation claims, more firms are setting up teams to manage the claims, instead of depending on third-party administrators.

Swaraj Krishnan is CEO, Bajaj Allianz General Insurance.

Published on: May 28, 2009, 5:02 PM IST
Posted by: AtMigration, May 28, 2009, 5:02 PM IST